Thursday 9 October 2008

UK: Launch of "Tomorrow's Owners - Stewardship of Tomorrow's Company"

Yesterday saw the launch by Tomorrow's Company of the report "Tomorrow's Owners - Stewardship of Tomorrow's Company". The report reviews changes in the ownership of company shares and argues that there are different roles for shareholders. It accepts that not all shareholders want to be "stewards" - those influencing companies in the direction of long term sustainable progress - but argues that investors wishing to act as such should be supported. The report identifies the following questions (to quote directly from the press release):
  • What can be done to address the lack of alignment between the interests of some investors and some companies?
  • What regulations or frameworks are needed to underpin stewardship – protecting the long-term health of a company and supporting global growth?
  • Can regulators and the law continue to treat all shareholders in the same way?
  • Why should a CEO extend the same time and co-operation to a short-term investor seeking to profit by movements in the company’s share price as to a long-term intrinsic investor?
  • What does stock-lending do for the concept of stewardship?
  • Why do pension funds allow stock-lending across the board when it can harm their longer term approach in particular situations?
  • Doesn’t the practice of borrowing shares to vote negate the stewardship role?
  • Why don’t pension funds do more to influence the activities of the hedge funds and private equity vehicles through which they invest, especially where the actions of those funds can compromise their longer term interests?
  • Government ownership has been extended to a number of strategic financial institutions recently. Is it necessary to review the case for state ownership of strategically important industries – energy, defence, food - or could foreign ownership help to guarantee economic interdependence and its wider benefits?
  • Shouldn’t responsible investment criteria apply to debt holders as well as equity?
Further information is available in this press release (in Word format).  The report is not available online but is available for purchase. It has been discussed in the Financial Times newspaper - see here

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