Taking responsibility

Professional Pensions 9 June 2005

Do you think companies that make voting recommendations to shareholders should be more responsible in the advice they give?

If you have professional shareholders who have access to the right information, analysis and mechanics, then frankly they are more than competent enough to make considered voting decisions.

Not everyone wants to be a "governance anorak" but we think that the more tht governance might affect us the better. I have met an awful lot of very smart fund managers and I think it is almost insulting to their intelligence that they have to be spoon fed recommendations.

I think 10-15 years ago when governance was new, then they needed guidance. But it almost has the wrong effect in that the more you spoon feed people the less likely they are to make their own judgements.

Our philosophy is about bringing corporate governance into the investment industry - about making it pat of the investment process and not just making it a once-a-year activity.

Are these companies beneficial in promoting and highlighting governance standards within UK businesses?

I think that motivating investors to become involved in the governance debate can only be a good thing because many fund managers believe that it is a drain on the bottom line.

We are all commercial organisations and we can't get away from the fact that it is a selfish and altruistic motive in promoting these issues. The question is, are you a trade association or are you a commercial organisations? I think people are becoming concerned, particularly issuers, about the blurring between the two.

However, it is about how companies are managed and controlled in the interests of their stakeholders. It is not always possible for a company to make radical changes overnight. It is like a supertanker it takes time for it to turn.

Does the corporate manslaughter Bill which was unveiled in the Queen's Speech, create an unfair playing field as it only targets companies in the private sector?

The plans - as outlined in the Queen's Speech - are in their very early stages and I believe we will have a very strong lobbying debate on them. The reason being that the UK has a very strong health and safety culture. UK issuers have responded very positively to concerns about health and safety standards and corporate manslaughter. You only have to look at the building industry where SRI initiatives play a very strong role in trying to improve health and safety standards directly because they work on the basis of what gets better gets done.

There will be a vocal section which says that we don't need another set of laws and that it will be another regulatory burden; it makes for catchy soundbites, but no-one can ever be complacent when it comes to protecting people.

There are many companies which have implemented good health and safety practices but I am not sure if the manslaughter bill will prevent another Alpha Piper disaster or a Hatfield rail crash. I won't say that this will be fraught with difficulties but it will be hotly debated.

Could businesses become bogged down in trying to adhere to so many different pieces of governance legislation.

This year has been horrendous for incoming legislation. The law does make mistakes but we are going in the right direction. It is not unreasonable to want to draw breath after so many pieces of legislation have come into effect but we must not ignore the market initiatives. There is some EU legislation that is disjointed but we have to pay attention to the regulation in the EU if we are to have a better understanding of companies that we have had before.

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