www.acga-asia.org Asian Corporate Governance

Transcript:www.acga-asia.org Asian Corporate Governance:
www.acga-asia.org Asian Corporate Governance Association (ACGA) "How to Enhance Effective Engagement - Best Practices in Asia and Around the World" Jamie Allen, Secretary General Benjamin McCarron, Specialist Consultant Asian Corporate Governance Association (ACGA) Securities and Exchange Commission, Thailand Roundtable Discussion, Bangkok, July 17, 2018 ACGA Presentation SEC, July 17, 2018 1 Agenda “Investor stewardship” – meaning and evolution Best practices in engagement – corporate reporting Best practices in engagement – investor dialogue ACGA Presentation SEC, July 17, 2018 2 1. “Investor stewardship” – meaning Institutional investors around the world (pension funds and investment managers) have been under increasing pressure to act as “stewards” of the capital they invest and of the assets/companies they invest in. What does this mean in practice? Investors need to look more closely at governance risk and take “environmental, social, and governance” (ESG) factors into account. They need to be proactive and engage in a “purposeful dialogue” with company management/directors, not just vote shares. The Global Financial Crisis (GFC) was the turning point. Institutions in the UK, Europe and US criticised for asking for unsustainably high returns, especially from banks, and ignoring burgeoning risk in the system. These basic concepts were not new…. 3 ACGA Presentation SEC, July 17, 2018 “Stewardship” before stewardship codes 1980s/1990s: State pension funds in the US began to develop policies and strategies on corporate governance. Voting shares, highlighting poor performers (CalPERS). 1990s/2000s: Pension funds and asset managers in the UK started to follow suit, with voting/CG policies and active voting. 2000s: Superannuation (pension) funds in Australia became actively involved in corporate governance issues and voting. 2005: National Pension Service in Korea revised its voting policies. Mid-2000s: ACGA members actively voting in this region. 2010: Employees Provident Fund, Malaysia, published its internal CG Principles and Voting Guidelines. Voting gradually led to engagement… ACGA Presentation SEC, July 17, 2018 4 How global investors have engaged Evolution over time 5 ACGA Presentation SEC, July 17, 2018 Stewardship codes in Asia today ACGA Presentation SEC, July 17, 2018 6 Source: ACGA research Investor stewardship in practice ACGA Presentation SEC, July 17, 2018 7 Engagement typically starts with and/or is weighted towards “governance”: Source: Norges Bank Investment Management 2017 Questions for investors Directors are the primary stewards of a company. How should shareholders exercise their “stewardship” function most effectively? What is the right relationship between the two groups? How do institutions manage and disclose the conflicts