16 July 2018

New corporate governance code needs investor engagement to deliver results

3 min read

 
Margherita Orlandini, Corporate PR Manager, Royal London

Margherita Orlandini

Corporate PR Manager, Royal London

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Commenting on the revised Corporate Governance Code, Ashley Hamilton Claxton, Head of Responsible Investment at Royal London Asset Management, said:

"We welcome many of the changes that have been made in this update to the UK’s governance regime.

Ultimately though, tangible results will come from institutional investors who have the potential to drive change through their power as the ultimate owners of companies. Shareholders must hold companies accountable for the provisions in the Code through both voting and engagement.

Many of these changes codify what’s already best practice in boardrooms, from the board’s responsibility to review workforce remuneration when setting executive pay to considering the views of key stakeholders. The requirement for a five year shareholding period for share awards is an example of this. We welcome the stronger requirements for management to continue to hold shares after they leave the company. This will provide better long-term alignment with shareholders.

The greater focus on company culture and employee relations are both positive steps, particularly the requirements on boards to demonstrate how they are delivering on these. In addition, as active investors in smaller companies, we support the extension of independence and board evaluation requirements, but acknowledge that they may need a greater degree of flexibility."

- ENDS -

For further information please contact:

Margherita Orlandini, Corporate PR Manager, Royal London

About Royal London Asset Management (RLAM):

Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.

RLAM manages £117 billion of assets and employs 89 investment professionals. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

For professional clients only, not suitable for retail investors.

Issued September 2018 by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.

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