Group of major pension funds launch Governance for Growth Investor Campaign

The campaign group – formed of schemes including Brunel Pension Partnership; The Church of England Pension Board; People's Pension; Brightwell and Railpen – comes as the government is increasingly focused on using pension capital to support UK growth and investment.

The GGIC argued that sustainable growth required good governance – adding that UK pension schemes needed to be empowered to help companies grow within private and public markets frameworks that support efficient and effective long-term value creation.

It said the campaign will shine a light on the evidence that effective corporate governance and shareholder rights help companies perform better by helping ensure they are well-run, transparent, and accountable – noting well-managed companies that make decisions in the best interests of all shareholders are more likely to grow sustainably, avoid costly mistakes, and attract long-term investment.

The campaign also pointed to growing geopolitical uncertainty and jurisdictions rolling back shareholder rights and governance mechanisms as an opportunity for the UK to become the "investors' destination of choice" for stable policy, high-quality companies and, through this, sustainable economic growth.

The move follows the publication of the Financial Services Growth and Competitiveness Strategy last week – a strategy that included a government commitment to establish a Listings Taskforce to support businesses to list and grow in the UK, a move the GGIC said was particularly encouraging and one it would support in helping to make it a success.

Railpen head of investment stewardship and co-head of sustainable ownership Caroline Escott said: "Today's launch comes at a vital moment for the UK's capital markets and economy. Over a year on from the general election, this government is making welcome headway on its reform agenda, providing the stable policy platform needed on issues including pensions, financial services, planning and industrial development to overcome the country's economic challenges and kickstart growth.

"Damaging to this drive is the misperception that the UK's historic world-leading corporate governance and shareholder rights mechanisms unnecessarily hinder growth, rather than providing the UK with a key differentiator and supporting long-term value creation in the interests of everyday UK savers."

Escott added: "Last year's UK listing changes watered down many longstanding shareholder rights – changes which to date do not appear to have had a positive effect on the UK IPO environment. Our campaign group of leading UK pension funds, who are already extensive investors in the UK economy, will instead put the evidence-based, ‘governance for growth' case to policymakers, and will work with others across the industry to highlight how good governance goes hand in hand with a growing economy and thriving capital markets."

Brightwell chief investment officer Wyn Francis said: "Strong governance shouldn't be viewed as a barrier to growth but a catalyst for it. Well-run companies that are transparent and accountable are more likely to succeed over the long-term. That's how we deliver sustainable returns for members and support a thriving UK economy. This initiative is about making sure our voice is heard in shaping the future of capital markets because good governance isn't just good practice, it's good business."

Policy pillars and priorities

The GGIC said its advocacy would be focused around four policy pillars, in a bid to "put saver needs at the heart of capital markets policymaking":

1. Securing pension schemes a formal seat in policy discussions on the UK's capital markets and corporate governance standards, including via participation in the new Listings Taskforce
2. Avoiding artificial divides between private and public markets, helping to smooth the journey of companies as they scale and mature
3. Working collaboratively with government to promote the UK's governance standards internationally, including on international trade missions
4. Empowering UK pension schemes to help companies grow by recognising the importance of shareholder rights

It said while the campaign will focus on longer-term, strategic relationship-building and awareness-raising with political and policy decision-makers around these pillars, in the immediate term the group will focus engagement on the draft audit reform and the Corporate Governance Bill.

Escott explained: "As well as having the space to convey our views, we want to work collaboratively with government on international trade missions to celebrate the UK economy. As has been pointed out elsewhere, in addition to structural factors, markets are in part driven by prevailing investor sentiment.

"We want to work with ministers to help change the mood music on the UK and tell an optimistic story that gets people excited about investing in Britain because of its governance standards. Our involvement will also add substance to these initiatives by integrating investor-to-investor knowledge and understanding into the discussions."

Railpen director of public markets Craig Heron added: "We know there's no silver bullet when it comes to getting the UK's capital markets and economy growing again. Much of the discussion this year has so far focused on ‘liquidity fixes,' which while valuable, ignores the importance of enticing investors with the ability to positively shape the companies they invest in. We believe that a ‘governance for growth' approach helps take us some way along that road, and we stand ready to support and accelerate the government's growth objectives with that vision in mind."

GGIC policy goals & next steps 

GGIC sets out its full policy vision here.