Corporate Governance 2004: Activist investors set governance agenda
New approaches to instilling high standards have fed into this year's Euromoney corporate governance survey. Initiatives include activist fund managers taking on mandates to advise other investment groups and the incorporation of governance criteria into bond ratings.
THOSE ACTIVIST FUND managers that have taken a lead in campaigning for improved corporate governance have now begun to broaden their influence by taking on mandates to advise other investors specifically on the corporate governance issues of companies in which they invest.
In June, Hermes, a pioneer in corporate governance and shareholder engagement, was appointed as adviser for all governance matters by the British Coal Staff Superannuation Scheme in relation to its £6 billion equity portfolio.
This new equity ownership service (EOS) involves Hermes providing ownership and corporate governance oversight, though the financial management of the fund's assets will continue to be the task of other fund managers.
Insight Investment, the asset management arm of UK bank group HBOS, which has over £71.8 billion in assets under management, was appointed in July to provide a shareholder activism service on governance and corporate responsibility issues for UK medical research charity Wellcome Trust's £3 billion UK FTSE 350 quoted equity portfolio.
Under the terms of the mandate, Insight will help develop and maintain the trust's governance policy, pursue engagement with companies, and manage the voting of the trust's shareholdings.