UK/US - Thirty UK pension funds have taken part in a successful campaign to force US mutual funds to introduce compulsory disclosure of corporate governance voting.
The top UK funds were prompted into action over fears of another US corporate disaster similar to Enron and WorldCom.
Together they wrote a letter giving their support to the US Securities and Exchange Commission proposal to introduce public voting disclosures for mutual funds.
The letter said: “Given that a significant portion of our members’ assets are invested in the United States, we have a strong interest in promoting good governance and corporate responsibility practice in that market.”The proposals, which were approved four-to-one by SEC executives, had been met with some opposition in the US.
The UK funds which took part in the action are British Airways Pension Investment Management, Railway Pension Investments, Shell Pensions Management Services, the Universities Superannuation Scheme and the Local Authority Pension Fund Forum, representing 27 local authority pensions funds.
Railway Pension Investments special projects officer Frank Curtiss said the £11bn Railway Pension Scheme had 6% of its assets in the US equity market last year and that the US could benefit from UK experience on corporate governance.
He explained: “We have to be careful because the US resents foreigners attempting to dictate the agenda, but in view of recent local difficulties in the US [WorldCom and Enron] it is perhaps less of an issue than it has been in the past.”
Universities Superannuation Scheme senior adviser Raj Thamotheram said the move to compel mutual funds to disclose voting records would help give a more adequate picture of corporate governance accountability and activity.
He stressed: “Many specialists told us that corporate governance activities are less developed than they need to be, but without disclosure we could not tell if that was the case.”
He added: “We and other pension funds decided to share our experiences of the value of disclosure and the value of engagement by managers on these issues.”
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