Are millennials adequately represented on trustee boards?
In terms of age profile, MNTs tend to be at the upper end, but I think it is important for the younger generation to be represented on boards. Intergenerational pension schemes are good in the sense that you’ve got people with different perspectives on the length of time and investment. So, yes, it would be good to encourage younger people to be involved as they do take a perspective that investments should not only do well financially, but also do good in social terms.
Do you think it is important to have wider diversity on trustee boards?
I think it’s beneficial to have it. Individual companies will see things in different ways and at smaller companies with a homogenous type of activity, people who come forward to be trustees will probably have a similar background. I think it is good to have a diverse perspective. The other requirement for boards which is being increasingly commented on, I think, is the skills required of the chair to move the board forward in the right direction. Indeed, interestingly, trustees are also asking for guidance in what are called ‘softer skills’ such as holding experts to account, negotiating with managers, selecting advisers and what good chairmanship looks like.
Are these softer skills lacking on trustee boards at the moment?
There seems to be quite a bit of circumstantial evidence that a lot of repeat engagements happen on the old acquaintance network and so the ability to review things formally is something which needs to take place. The reduction in the number of DB schemes and increase in DC will shake the cage a bit in terms of dependence on advisers. Will there be a need for fewer actuaries? We need to respond to changes in the marketplace. Holding experts to account is essential in active ownership which is what Red Line Voting aims to do.
How is that initiative going?
What it seeks to do is to enable trustees to exercise their stewardship obligations as asset owners. In particular, smaller schemes in our membership who, typically, invest in pooled funds. The next stage of the operation is that we are doing a research project to investigate how it’s proceeding and whether there are any sticking points and, if so, how we can overcome those. In terms of market developments, we expect that at least one fund manager will soon come forward with a Red Line-compliant fund, which schemes will be able to invest in.
