Investor Forum 2017 review sees rise in collective engagements

Jan 26, 2018
Engagements aim to help shape important drivers of long-term value

The Investor Forum has published its 2017 Review of Activities, identifying the companies with which it engaged last year – revealing a rise in its collective engagement activity – and providing an update on its stewardship activities. 

The forum’s approach aims to provide tools for shareholders to escalate concerns and address complex problems with UK-listed companies. The collective engagements the forum undertook in 2017 aimed to rebuild trust between shareholders and company boards in a number of difficult situations. Last year saw a significant increase in collective engagement activity:

– Members proposed 14 different company situations for collective engagement

– Ten of those situations resulted in comprehensive engagement with companies.

The 2017 review discloses details of seven completed engagements with Amerisur, BT Group, ECO Animal Health, IP Group, London Stock Exchange, Rio Tinto and Worldpay. The engagements aim to help shape important drivers of long-term value, including succession plans, transaction structures, operational performance, capital allocation and company reporting.

The forum also worked with investors on two thematic issues in 2017: working practices in the apparel sector and long-term value creation in the banking sector. As a result of these projects, the forum initiated reports and published frameworks to help companies understand how investors will judge them, and encourage an improvement in practice and transparency.

When asked by IR Magazine what the most surprising issue revealed by the review was, Andy Griffiths, executive director of the Investor Forum, responds: ‘We were delighted that the project on working practices in the apparel sector provoked such important conversations and received strong member interest. Most companies we contacted welcomed investor interest in non-financial factors. 

‘We were [also] pleased that the cases we have been involved with in 2017 have included more proactive cases, where companies enjoy shareholder support, but members were seeking to address some red flags before conditions deteriorate. 

‘We saw some tangible impacts and swift results, which was a satisfying demonstration to members that the collective voice can be stronger than their individual efforts to get a company to hear a difficult message. We have proved that the model works across the spectrum from FTSE 100 companies to Alternative Investment Market-listed firms.’

Adding a more general outlook on company-shareholder engagement, Griffiths says: ‘Stewardship and effective engagement are moving to center stage for all investors. The environment is changing and expectation that investors will be active owners is increasing.’ 

Asked what he sees as being potential challenges in 2018, he says: ‘We will be helping members to navigate a number of challenges we think are likely to be on the agenda in 2018.’ These include:

• Learnings the lessons from Carillion and other failures

• Navigating the changing political and regulatory landscape, including the reviews of the corporate governance and stewardship codes

• Building trust with the public that the investment industry is a force for good

• Implications of the increase in activist campaigns for both traditional investors and companies.

The forum also announced that Sir Peter Gershon, chairman of National Grid Group and former chairman of Tate & Lyle, will join its board of directors. At the conclusion of the Investor Forum’s AGM yesterday, David Lis stepped down from the board, having served since the inception of the organization.

Forum chairman Simon Fraser says:We had a busy and successful 2017 and have now firmly established the Investor Forum as an independent organization, facilitating valuable collective shareholder engagement.’

 

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