An influential group of investors, including trade bodies, asset managers and companies, has launched an industry-wide forum aimed at promoting long-termism and collective action in institutional investing.
The Investor Forum has been launched by the Collective Engagement Working Group – set up in April this year facilitated by the Investment Management Association – following the recommendation of professor John Kay in his review on UK equity markets and long-term decision making in July 2012.
The Working Group’s objective was to identify how investors might be able to work together in their engagement with listed companies to improve both sustainable, long-term company performance and overall returns to end savers.
The subsequent Investor Forum will be operational by June 2014 and will:
– Promote shared commitment to long-term strategies and sustainable wealth creation among asset owners, asset managers and companies
– Operate “Engagement Action Groups”, open to overseas investors as well as traditional UK investors, to address and resolve issues of concern when they arise at major UK listed companies
– Have its own secretariat to progress the forum’s objectives and manage the Engagement Action Groups. The forum has secured funding for at least two years from investors and trade associations.
It will also aim to drive cultural change and promote the commitment of more resource to long-term stewardship and engagement by institutional investors.
Furthermore, the group has recommended major listed companies should hold an annual strategy meeting for institutional investors, outside the results cycle, where investors and company executives can link governance to the company’s long-term strategy without the focus on short-term results.
Sacha Sadan, director of corporate governance at Legal & General Investment Management will now lead an implementation team to establish the forum’s governance structures, appoint individuals to roles and identify other requirements to ensure the forum becomes fully operational. The implementation team will deliver a status update report by the end of March 2014.
Collective Engagement Working Group chairman and Baillie Gifford partner James Anderson said: “The Investor Forum that we have announced today will drive cultural change and act as a mechanism for investors to work together more effectively when there are issues at particular companies that have not been resolved by conventional engagement.”
Secretary of State for Business, Innovation and Skills, Vince Cable said: “I welcome today’s report. This acknowledges the need for a shift in the culture of equity investment, focusing on long-term wealth creation and a stronger voice for committed investors.”
Kay added: “The Investor Forum was central to the recommendations of our review of equity markets. I am delighted at the success of the IMA in bringing the industry together to advance collective engagement between institutional investors and companies.”
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