As CIRI’s annual conference woke up to chilly rain last Wednesday after a night of country two-step, cold reality set in. Macro risks in Europe, slowing growth in emerging markets, central bank policy divergence, conflict in the Middle East – these were just a few of the heavy topics that enlivened the first session on the last day in Banff, Alberta as two economists gave a global run-down.
This being Canada, the US was a big focus. ‘The US is the dog that wags a lot of tails here north of the border,’ said Todd Hirsch, chief economist for ATB Financial, an Alberta government bank.
And this being Alberta, oil loomed large. ‘When the most stable country in OPEC is Venezuela, you know you’re in trouble,’ quipped Deborah Yedlin, a business columnist for The Calgary Herald.
Later in the morning activism came up for debate – or rather ‘attackism’, as Helen Beck from Quebec’s pension fund, the Caisse de Depot, put it. Beck declared disappointment at the level of engagement between companies and investors. ‘There is an improvement, but it’s coming from investors, not companies. I would expect them to be more proactive,’ she said.
Beck explained how the Caisse is an avid supporter of McKinsey and CPPIB’s initiative, Focusing Capital on the Long Term, with a new relationship committee helping to decide the level of engagement to pursue with different companies.
Zachary George, a co-founder of activist fund FrontFour Capital, countered the implied accusation of short-termism: ‘Hedge funds like mine are given that label. But we own companies for four to eight years. If you have a record of underperformance, bad strategy and bad management, you lose the right to lecture shareholders on short term versus long term.’
Beck and George did agree on one thing: the perniciousness of blind voting. ‘It has astounded me how some large institutions do not read the proxies. It’s against their fiduciary duty as investors,’ Beck remarked.
As IROs went to hear an inspirational closing speech by Olympic speed-skating medalist Kristina Groves, they were left with a sense of pressure from both ends of the investment spectrum. Even long-term-oriented pension funds demand heightened engagement and are ready to ‘read the riot act,’ as Beck put it, to misbehaving companies.
Beck, like many of the speakers on a strong conference agenda this year, had a lot of crucial things to say to IROs. Perhaps she could be convinced to make a return appearance in her home province next year, when CIRI takes its annual conference to Quebec City.
