Investor forum aims to drive company change

RoundtableInstitutional investors and large, listed companies should meet outside the results season to hear details about long-term corporate strategy, a group representing fund managers says.

Trade bodies including the National Association of Pension Funds (NAPF) are backing the launch of the Investor Forum for Collective Engagement, which is designed to increase engagement between companies and investors.

The forum is to be operational by June 2014 and will also invite foreign investors, such as sovereign wealth funds, to participate in “engagement action groups”.

The Association of British Insurers and the Investment Management Association (IMA) are also supporting the forum, which is an initiative of the Collective Engagement Working Group.

The group was formed in the wake of the Kay Review of equity markets and long-term decision-making – a 2012 report by John Kay, economics professor at the London School of Economics, which seeks to make companies more accountable to their shareholders and public, and make equity culture less short-termist.

In a statement from the IMA, Vince Cable, the UK secretary of state for business, innovation and skills, says: “We now need to see immediate and concrete action to make the forum a reality”.

James Anderson, partner at Baillie Gifford, chairs the Collective Engagement Working Group, which formed in April and has since issued a set of recommendations, including the annual strategy meetings for institutional investors outside the results cycle.

“Asset owners, asset managers and companies need to develop a shared sense of partnership, with the objective of promoting long-term strategies for prolonged competitive advantage at companies – leading to sustainable wealth creation for all stakeholders,” the group says.

Sacha Sadan, director of corporate governance at Legal & General Investment Management, will lead the implementation of the forum, which is expected to deliver a status update report by the end of March next year.

Cable says the creation of the investor forum “acknowledges the need for a shift in the culture of equity investment”.

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