Five of the UK’s largest pension schemes, managing £150 billion for 11 million savers, have launched the Governance for Growth Investor Campaign (GGIC) to promote stronger corporate governance as a driver of long-term economic growth.
The group, which includes Brunel, Railpen, Brightwell, People’s Pension, and the Church of England Pension Board, collectively invests over £60 billion in the UK.
The GGIC believes that companies with strong governance are more likely to grow steadily, avoid costly errors, and attract long-term investment. It wants pension schemes to have a clear role in shaping governance policy and supports recent government moves like the Listings Taskforce.
The campaign focuses on four main goals: making sure pension schemes have a say in policy decisions; removing barriers between private and public markets; promoting UK governance standards internationally; and protecting shareholder rights to help businesses grow.
The GGIC will also work on the Draft Audit Reform and Corporate Governance Bill, supporting actions to improve shareholder involvement, ensure better audits for large private companies, and make voting results clearer.
Railpen head of investment stewardship and co-head of sustainable ownership Caroline Escott says: “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. 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.”
Escott added: “UK pension schemes naturally want to see our capital markets succeed, ensuring we can access well-run, high-performing companies that help deliver good outcomes for members and the economy more broadly. Our fiduciary duty means we’re in a unique position in the financial system, motivated purely by everyday savers’ interests and delivering over the long-term, rather than short-term fee generation. At a time when government is urging UK pension schemes to boost the economy, it’s fundamental that we have a seat at the capital markets and corporate governance policymaking table to make the case for sustainable growth. Last week’s announcement that the government will establish a Listings Taskforce encouraged many across the sector and provides an opportunity to set a precedent around involving pension schemes and utilising their expertise. We hope to have productive conversations with the government on this possibility.
“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 says: “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.”
Brightwell chief investment officer Wyn Francis says: “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.”
