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transatlantic alliance targets firms

October 2003

Twenty-seven large European and US institutional investors have agreed to explore ways of working together on corporate governance and CSR issues.

The group of investors, who manage $1.5trillion (£900billion) between them, met in California last month to discuss whether they should co-operate to persuade companies to do more on issues such as climate change, human rights, executive compensation and board independence.

They agreed in principle to work together, and will develop a plan of action in the next few months. They will also make joint interventions on policy by lobbying financial regulatory authorities and governments in the US and UK, and may share information on shareholder voting actions.

Among the 17 US and 10 European institutions present were the two largest US pension funds, California Public Employees’ Retirement System and the New York State Common Retirement Fund, Dutch pension fund ABP, and UK-based Morley Fund Management.

Dan Summerfield, adviser on responsible investment at the UK’s Universities Superannuation Scheme, which brought the investors together in San Diego, said: ’It’s the start of a process of forging closer alliances between US and European investors on these issues.

’We don’t believe the collective power of institutions is being properly exercised or that there is sufficient transatlantic collaboration on common issues; this network should help with both. The hope is that European funds engaging with companies in Europe will ensure that US funds are kept informed of contentious issues – and vice versa.’

Rob Lake, head of socially responsible investment at UK-based Henderson Global Investors, who was also at the meeting, said: ’We invest in US companies, so it makes sense for us to talk to US investors about working together to promote higher standards on corporate governance across the Atlantic. There was an agreement that we have shared interests, but now we will have to work out what we are going to do.

’One of the obvious options is to link up to vote on shareholder proposals, but there will not be a formal programme that everybody has signed up to. It will be much more about individual initiatives on specific issues that investors can support if they want.’

Lake said that while the European investors present had been keen to ensure CSR issues had a high profile, their US peers were more concerned with conventional corporate governance subjects.

’It would be fair to say that while in the UK we see issues such as climate change and human rights as being important to corporate governance as a whole, in the US they have walked along a different path. But [CSR issues] were very much on the agenda of our discussions.’

Summerfield said CSR issues are more likely to come to the fore once a common position on traditional corporate governance subjects has been developed. ’These issues were discussed at the meeting and are likely to be taken forward in the future. At this stage it’s a case of establishing the mechanisms and processes for collaboration.’

The informal alliance is planning to set up a secure website where members can exchange information.




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