New York, December 5, 2017—The Investor Stewardship Group (ISG), a collective of some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts, introduced its Framework for U.S. Stewardship and Governance in early 2017. The Framework goes into effect January 1, 2018.
Beginning with the 2018 proxy season, ISG 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.
“The ISG is advocating for communication – not a tick-the-box compliance exercise,” said CalSTRS Director of Corporate Governance, Anne Sheehan. “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.”
The goal of the ISG is to establish the first ever, broad-based U.S. Stewardship and Governance Code. Individual ISG members, it should be noted, may differ on specific standards, as outlined in their own proxy voting policies/guidelines, regarding corporate governance practices that are expected of companies.
The ISG’s Framework 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. 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. Aligning with the Framework is not a substitute for direct engagement between companies and investors on matters of mutual interest.
“This was a busy year for the ISG and we’re thrilled with the response that we’ve received so far,” said Allison Bennington, Partner and General Counsel of ValueAct Capital.
Said 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.”
ABOUT THE INVESTOR STEWARDSHIP GROUP
The Investor Stewardship Group (ISG) reflects the collective views of its roughly 50 signatory and endorser institutions, representing more than $22 trillion in assets under management, and establishes a foundational set of investor expectations about corporate governance practices in U.S. publicly listed companies. To learn more, please visit: