Manifest has welcomed the Financial Reporting Council’s role as the new guardian of an institutional investor Stewardship Code but has proposed that the Code itself should be the subject of its own consultation rather than a simple grandfathering of the existing ISC principles.
Proposals for a parallel code for investors to sit alongside the UK Governance Code emerged from the Walker Review when many respondents, including Manifest, highlighted the need for a more transparent and representative mechanism for investor governance was needed.
A key theme in the Walker Review was Sir David’s concerns that boards of Banks and other Financial Institutions (BOFIs) had become held captive to Group Think. Manifest argues that a number of investors have fallen into the same trap and that the majority of active ownership is being undertaken for the benefit of the many by a select few. “The progress of the Stewardship Code will be watched carefully on a global stage,” said Manifest CEO, Sarah Wilson, “just as the Cadbury Code was ground breaking in its day, the Stewardship Code has the potential to become best practice principles for global investors, irrespective of domicile”
Commenting on calls for greater transparency by proxy voting agencies, Manifest has said that it welcomes the opportunity to dispel some of the myths surrounding corporate governance advice, and looks forward to a robust dialogue with the FRC in the future. Wilson cautions against “ghettoising” the governance community with its own special code of conduct which she says: “would reinforce the perceived separateness of corporate governance from the investment process and defeat the object of the exercise which is to ensure that voting decisions are based on the best possible practices and integrated with the portfolio management process. The received wisdom in many houses is that governance is a non-value adding activity to be outsourced wholesale at the lowest possible unit price with little regard for quality or consequences.”