As one of the largest investors in the FTSE all-share index and one of the largest commercial property landlords in the UK, we have a huge opportunity to influence others. This year we have focused on taking the lead in Sustainable Property Development and maintaining our heritage of good governance has been built upon an ‘active’ rather than activist approach to engaging FTSE Boards.
Corporate Governance
The foundations of our Corporate Governance approach were developed through our membership of the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF).
Although we are guided by recommendations made by these organisations, LGIM makes voting decisions after discussions with companies, their advisors and our clients. Mark Burgess, Head of Active Equities at LGIM, is a member of the Corporate Governance Forum and the ABI’s Investment Committee; Andy Banks is on the Remuneration & Share Scheme Committee.
In 2008 we performed 27 engagements on Environmental, Social and Governance (ESG) issues with FTSE companies out of an overall total of 160.
At all times but especially during tougher economic times, our role is to make sure that the corporate governance of organisations is in line with our expectations or standards of business. In 2008, we have had involvement with some key industry debates including:- Anglo American and Zimbabwean mining activities
- Tesco’s and the issues around free range chickens
- CEO pay related to performance in the banking sector
- The Risking Risk in Tar Sands Report with Greenpeace (in relation to BP and Royal Dutch Shell) and Oxfam (on the Business and the Millennium Development Goals).
The new LGIM Corporate Governance brochure showing our approach to Good Governance is available, click here
Good Governance Business Case
In early 2008, we sponsored Business in the Community (BITC) to provide research in this important area, click here
The BITC research, ‘The Value of Good Governance: The Positive Return for Responsible Business’, was published on 30 October. The main headline finding of the research was that:
“Companies consistently participating in the CR Index outperform the FTSE 350 on total shareholder return 2002-2007 by between 3.3% and 7.7% per year.”
You can also view the transcript of the video in html.