About the Investor Stewardship Group and the Framework for U.S. Stewardship and Governance

The Investor Stewardship Group (ISG) is a collective of some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts. The members are a group of 38 U.S. and international institutional investors that in aggregate invest over $20 trillion in the U.S. equity markets. The ISG is being led by each member’s senior corporate governance practitioners. The ISG was formed to bring all types of investors together to establish a framework of basic standards of investment stewardship and corporate governance for U.S. institutional investor and boardroom conduct. The result is the framework for U.S. Stewardship and Governance comprising of a set of stewardship principles for institutional investors and corporate governance principles for U.S. listed companies. The corporate governance framework articulates six principles that the ISG believes are fundamental to good corporate governance at U.S. listed companies [1]. They reflect the common corporate governance beliefs that are embedded in each member’s proxy voting and engagement guidelines, and are designed to establish a foundational set of investor expectations about corporate governance practices in U.S. publicly-listed companies.

The corporate governance principles are not intended to be prescriptive or comprehensive in nature. There are many ways to apply a principle. However, as guidance, the ISG has provided the rationale and expectations that underpin each principle. Collectively, the members of the ISG are supportive of the corporate governance principles, though members of the group may differ on specific standards (as outlined in their public-facing voting policies/guidelines) regarding corporate governance practices that are expected of companies.

The ISG encourages shareholders’ elected representatives — company directors — to apply the corporate governance principles at the companies on whose boards they serve. The ISG will evaluate companies’ alignment with these principles, as well as any discussion/disclosure of alternative approaches that directors maintain are in a company’s best interests.

 

The stewardship framework seeks to articulate a set of fundamental stewardship responsibilities for institutional investors.

Listed companies should recognize that some of their largest investors now stand together behind these principles

As with the corporate governance principles, investors should implement the stewardship principles in a manner they deem appropriate. As guidance, the rationales and expectations that underpin each principle have been articulated. The ISG encourages institutional investors to be transparent in their proxy voting and engagement guidelines and to align them with the stewardship principles. These principles should not restrict investors from choosing to adopt more explicit and/or stronger stewardship practices.

 

The framework for U.S. Stewardship and Governance is not intended to replace or supersede any existing federal or state law and regulation, or any listing rules that apply to a company or an institutional investor. The framework is also not intended to be static and will be evaluated and revised periodically, with the consensus of its members, as expectations of corporate governance and investment stewardship evolve.

 

We welcome and encourage other investors to sign up and support the framework for U.S. Stewardship and Governance.

 

The framework goes into effect January 1, 2018 to give U.S. companies time to adjust to these standards in advance of the 2018 proxy season.

100Days 18Hours 37Minutes 09Seconds

Countdown To Implementation of ISG Principles.


[1] The Corporate Governance principles do not apply to U.S.-registered investment companies and business development companies, because they are not operating companies and have unique corporate governance practices as provided by law.