The UK’s National Association of Pension Funds (NAPF) says it will scrutinize individual votes at shareholder meetings more closely and more aggressively hold individual board members to account as it intensifies its focus on corporate sustainability.
The body says it will also take a wide view of risk by incorporating reputational hazards stemming from accounting issues, cyber-crime and climate change, and more carefully examine remuneration policies as it overhauls its corporate governance policy and voting guidelines.
The association, which represents more than 1,300 pension plans with 17 mn members and assets of more than £900 bn ($1.4 tn), says the policy changes are meant to switch from a ‘box-ticking’ approach to sustainability guidelines and prompt members and the companies they invest in to consider sustainability on an issue-by-issue basis.
‘We focus our efforts on maximizing the long-term returns of our members’ assets, irrespective of the potential for short-term discomfort,’ says Will Pomroy, corporate governance lead at NAPF. ‘We strongly encourage shareholders to make systematic use of all the powers at their disposal to support the highest standards of governance at the companies in which they invest, and consequently to support the success of these companies for the benefit of their individual scheme members.’
As part of the changes, the NAPF will no longer recommend members abstain from certain votes but rather ‘place stronger emphasis on holding the individuals within the board to account on issues relevant to their area of responsibility’.
The overhaul comes after the NAPF’s joint licensing agreement with proxy advisory firm ISS expired in June 2014. The association says it is now moving from a general approach to its corporate governance code to focus instead on specific resolutions.
