Views on improving the integrity of global capital markets
22 June 2017

CorpGov Roundup: Gender Diversity, Stewardship Principles, and More

There is never a shortage of corporate governance news to report each month, and May was no different. Australia is getting serious about gender diversity on boards, and Canada joined the growing list of countries adopting stewardship codes. In Japan, the government pension fund looked into the stewardship activities of those managing the pension’s assets. A university in Saudi Arabia is undertaking a three-year project to create an index ranking companies according to their corporate governance practices. With the United Kingdom at a crossroads, industry leaders are calling on the government to improve elements of corporate governance. And the recent UK election may change which party’s corporate governance plans will be pushed forward. Finally, a recent study out of the United States deals a blow to an argument for dual-class shares.


The Australian Council of Superannuation Investors (ASCI) has warned 17 ASX 200 (Australia’s market index) companies that they plan to vote against their sitting directors this year if they do not appoint any women to their boards. In 2015, ASCI adopted a policy calling for women to make up 30% of all ASX 200 corporate boards by the end of 2017.


The Canadian Coalition for Good Governance recently published its stewardship principles. The aim is to enhance the long-term sustainable creation of value so companies and their investors can prosper and, in the process, benefit the market and society as a whole. The principles are similar to other stewardship codes adopted in recent years around the world. The following are the seven principles:

Principle 1 – Develop an approach to stewardship

Principle 2 – Monitor companies

Principle 3 – Report on voting activities

Principle 4 – Engage with companies

Principle 5 – Collaborate with other institutional investors

Principle 6 – Work with policy makers

Principle 7 – Focus on long-term sustainable value.


The Government Pension Investment Fund, Japan (GPIF) recently conducted a survey to evaluate the stewardship activities of firms managing GPIF’s assets. The survey finds that asset managers are incorporating more environmental, social, and governance (ESG) factors into the investment process and that passive managers lag active managers in following the stewardship code. On a negative note, many companies say they have received no explanations for negative votes from investors despite increased insistence from GPIF for a better dialogue between companies and investors.

On the topic of engagement, a recent Tokyo Stock Exchange (TSE) report noted that all companies listed on the TSE have a policy that encourages engagement with investors. But less than half have a person internally or on the board to coordinate such engagement.

Saudi Arabia

Alfaisal University recently formed (pending final approval) a Corporate Governance Research Center that is developing a corporate governance index that will rank publicly traded companies in the Saudi market on their corporate governance practices. It is a three-year project. The first year, which ended in May 2017, focuses on the calculation of rankings in the CGI of companies traded on the Saudi Financial market during fiscal 2015. The second year, which is expected to end in February 2018, is anticipated to focus on the calculation of rankings in the CGI of companies traded in the Gulf Cooperation Council (GCC) markets (Bahrain, Kuwait, Oman, Qatar, United Arab Emirates, and Saudi Arabia). In the third year, expected to end in January 2019, will be the release of the CGI for major companies traded in the GCC markets and will mark the completion of the formation of the Corporate Governance Research Center

United Kingdom

The Confederation of Business Industry issued a “business manifesto” [link no longer active — editor] before the British elections calling for a strengthening of shareholder power to curb excessive pay, and require companies to report on engagement. The report calls on government to introduce an “escalation mechanism” for companies who have faced a vote of 25% or more against say on pay outcomes for two consecutive years. The report also calls on government to require companies to publicly report on how they have engaged with employees and stakeholders.

UK Prime Minister Theresa May’s plans for corporate governance may be in doubt because of her parties slim win at the polls, although both parties focused on executive pay as a key governance issue. May’s plan also included some form of worker representation on company boards, although how that would be done is still under discussion. The opposition labor party’s own manifesto calls for a tax on excessive executive pay and a rewriting of company law that challenges the notion of shareholder primacy by looking to put all stakeholders on equal footing with shareholders as far as to whom the board owed their duty of loyalty.

United States

A recent study by the Council of Institutional Investors (CII) found that dual class shares do not affect return on invested capital, which cuts down the argument often given in support of dual class shares that multi-class equity structures are necessary for managers to deliver long-term performance. CII analyzed data on 1,762 US-incorporated Russell 3000 companies and designed two regression models to study the relationship between multi-class equity structures and long-term performance.

A report released by Millstein Center for Global Markets and Corporate Ownership and The Conference Board Governance Center details how general counsel offices can battle the issues of short-termism in the markets. Both groups call on general counsels and boards to do more to ensure that companies are run in a sustainable manner. Future summits are planned in the future to coordinate among more general counsel’s offices and their boards.

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Photo Credit: ©Getty Images/YinYang

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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