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A collection of global asset-management firms unveiled a set of principles for institutional investors and a set of corporate governance standards for public companies that are intended to help drive the creation of long-term value.

Specifically, the Investor Stewardship Group — which includes U.S.-based firms such as BlackRock Inc., the Vanguard Group, and T. Rowe Price Group Inc., along with MFS Investment Management and Royal Bank of Canada’s asset-management division, among others, and represents US$17 trillion in assets under management — is calling for an end to public companies using dual-class share structures by ensuring that shareholders are entitled to voting rights in proportion to their economic interest.

The group also stresses that boards are accountable to shareholders and should be responsive to their demands; that boards should be independent; and that they should develop management incentive structures that are aligned with the long-term strategy of the company.

The principles for institutional investors stress that they are accountable to those whose money they invest. The group is calling on firms to demonstrate how they evaluate corporate governance; that they should disclose how they manage potential conflicts of interest in their proxy voting; and that they should attempt to resolve differences with companies in a pragmatic way.

The new corporate governance framework is slated to go into effect Jan. 1, 2018 to give U.S. companies time to adjust to its standards in advance of the 2018 proxy season.

“In markets around the world, there are well-established governance and stewardship codes. The Investor Stewardship Group’s goal is to codify the fundamentals of good corporate governance and establish baseline expectations for U.S. corporations and their institutional shareholders,” says Anne Sheehan, director of corporate governance at the California State Teachers’ Retirement System, in a statement. “The group brings all types of investors together and enables us to speak with one voice on these fundamental issues.”

“We believe that the principles detailed in the framework will further the productive dialogue and, most importantly, continue to drive positive change among institutional investors and the companies in which they invest,” adds Glenn Booraem, principal and fund treasurer with0 Vanguard. “By articulating this set of shared behavioural expectations, we seek to promote our common objectives to create sustainable, long-term value for all shareholders.”

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