The Investor Stewardship Group (ISG), a coalition of some of the largest U.S. based institutional investors and global asset managers, along with several of their international counterparts, is working with US companies to ensure they comply with its corporate governance framework which takes effect from 1st January 2018.

The framework, which incorporates corporate governance and stewardship principles, was launched earlier this year. The ISG said its goal is to establish the first ever, broad-based U.S. Stewardship and Governance Code. This would be a change within US corporate governance which is generally based on company law at federal and state level and listings rules with the added impetus of shareholder pressure through resolutions at company meetings.

The corporate governance framework, the ISG said, is not intended to replace or supersede existing federal or state law and regulation, or any listing rules nor is it intended to be all-inclusive or comprehensive in nature. The ISG added that just as there are many ways to apply a principle, there a variety of ways that companies may communicate with their investors about the corporate governance principles.

The ISG said its signatories are encouraging companies to articulate how their governance structures and practices align with the ISG’s corporate governance principles and where and why they differ in approach. ISG signatories believe companies can best decide on how and where to disclose their alignment with the principles, for example, through investor relations, boards of directors or corporate governance websites, or in other investor outreach/engagement materials.

Anne Sheehan CalSTRS director of corporate governance said: “We’ve spent the last year speaking with individuals involved in the corporate governance space, both in the U.S. and abroad, to determine the best way for companies to communicate their alignment with our Framework. Those conversations gave us a better perspective on how the ISG can be most effective in the U.S.”

Donna Anderson, head of corporate governance at T. Rowe Price, “We’re excited to see the Framework for US Corporate Governance officially take effect for the 2018 proxy season. Members of the ISG look forward to continued productive engagement as we seek long-term outcomes in our clients’ and beneficiaries’ best interests.”

Last Updated: 8 December 2017