COVID-19: The Investment Association’s Position

The Investment Association (IA) has written to the chairs of FTSE 350 companies setting out the position of the IA in relation to certain issues which have arisen due to the COVID-19 pandemic. The letter emphasises the IA’s position as a representative of long-term investors and clarifies the views of its members as regards the need to support businesses which, although impacted by the current situation, remain fundamentally capable of delivering “sustainable long-term value for savers and investors”.

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AGM (Coronavirus) Season 2020

The 2020 AGM season is upon us at a time of the fast escalating coronavirus pandemic. This briefing looks at the implications of coronavirus on AGMs.

Public companies must hold an AGM within six months of their financial year end. By their very nature, AGMs entail people travelling to gather in one place. This raises questions over possible government bans on travel and limits on the number of people who may gather in any one place. Also, the venue for the AGM may have to close at short notice for deep cleansing. This all presents companies with significant uncertainty around planning the AGM and deciding what contingency plans are available.

How a company decides its approach to its AGM will in part depend on where it is in its reporting cycle and how it perceives the pandemic playing out.

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LR, DTR, Prospectus Regulation and MAR: FCA consultation on climate-related and other ESG disclosures

Climate change is clearly something which is at the forefront of the minds of communities and governments. Increasingly, climate change and its impacts are being considered by companies and investors alike, as they become more aware of the potential impact – both directly and indirectly – that climate change may have on the value of assets and prospective profits. In the US for instance, the Sustainability Accounting Standards Board has assessed that climate change is material for companies in 72 out of 79 industries, which equals 93% of the US equity market.

Equally, as the UK seeks to turn to a low-carbon economy, investors are becoming increasingly interested in committing their money to companies and projects that will support this transition.

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Investment Association: Shareholder Priorities for 2020

In looking at shareholder priorities for the year ahead, the Investment Association (IA) has recently published a report which sets out the areas it believes investors will place greater importance on in terms of corporate delivery. These areas are:

  1. Responding to Climate Change.
  2. Audit Quality.
  3. Stakeholder Engagement and Employee Voice.
  4. Diversity.

Taking a look at each of the areas in turn, the following particular points are made:

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The Equal Pay Bill

Section 78 of the Equality Act 2010 (as amended by the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which came into force on 6 April 2017) (“EA 2010“), currently governs how large private and voluntary sector employers (defined as those with 250 or more employees as at 5 April each year) report on and publish information relating to their gender pay gaps.

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Climate Change: Chapter Zero

The World Economic Forum under its Climate Governance Initiative has developed a set of principles for good board governance on climate change. It is also calling for global networks of directors to be forged to help establish these principles in practice and to drive forward action on the net zero carbon challenge.

In the UK, a network of chairs, audit chairs and other non-executive directors, named Chapter Zero,  was set up earlier this year and it’s membership (which is free) is predictably expanding given the centrality of climate related issues.

 

Corporate Governance: Revised UK Stewardship Code

On 24 October 2019, the Financial Reporting Council (FRC) published the UK Stewardship Code 2020 (2020 Code) which will take effect from 1 January 2020.

The FRC has described the new version as a ‘substantial and ambitious’ revision to the 2012 edition with high expectations of those investing money on behalf of UK savers and pensioners and a much greater focus on the activities and outcomes of stewardship, not just policy statements.

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Investment Association’s Statement on Executive Pensions for 2020 AGMs

The Investment Association (“IA”) has recently published a new statement relating to executive directors’ pension contributions. The guidance is the next step from the IA’s statement in February 2019 and Good Stewardship Guide 2019, which call for executive directors’ paid pension contributions to be in line with the majority of the workforce.

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