Red Line Voting gets Green light to Save Planet, Respect Human Rights and Stop Fat Cats

I was really pleased to take part in the debate and vote in favour of the AMNT's Red Lines initiative which was approved at our summer conference on Wednesday this week. They cover a wide range of environmental, social and corporate governance issues.

Red Line Voting empowers pension trustees to make responsible investing a reality and will direct fund managers to oppose poor governance practise in companies where failure poses a risk to its shareholders.

Trustees bodies will be able to instruct fund managers to follow all Red Lines en bloc or a sub section.  It should not cost the scheme for doing so. Fund managers will have to comply with these instructions or explain why not and then run the risk of being sacked by trustees.

On environmental Red Lines the AMNT  worked with Carbon Disclosure Project and will be urging pension schemes to adopt them as they believe it would take climate change up the UK corporate agenda.

On social issues the Red Lines include trade union recognition, race equality, gender equality, commitment to equality monitoring and publishing the data, that companies should have a plan to introduce the Living Wage, and get rid of zero hours contracts.

On governance there will be a vote against the remuneration policy if any director is paid more than 100 times the average pay in that company’s UK workforce. Also on governance companies should have a tax policy stating what their tax practises are.

The AMNT are now planning to launch Red Line Voting in Autumn, in time for the 2016 voting season. They have have worked closely with UKSIF on the development of these Red Lines and major fund managers are already preparing to implement Red Line Voting instructions.

The big campaign now is to persuade pension schemes to adopt Red Line Voting, particularly those in pooled funds. Up to now investors in pooled funds were in practise unable to direct the engagement and voting on the shares associated with their investments. Red Line Voting gets round this. Fund managers may receive dozens of Red Line Voting instructions, but they are all the same instructions so they can then allocate votes pro rata. Since more than £2-trillion of assets under management in the UK are in pooled funds this could have a significant impact.

The AMNT has been granted £75,000 by the Joseph Rowntree Charitable trust over two years to develop and launch this initiative.

Red Line Voting is a revolutionary concept. I agree with "Responsible Investment" magazine that this is "a major evolution in UK Pension funds" but think "Engaged Investor" got it right when they called it "Power to the People: the new power for trustees to control fat cat behaviour".

Many people have been involved in the AMNT project on Red Lines but special mention to its Co Chair Janice Turner, who thought it up and was the driving force behind it and Co Chair, Barry Parr and Committee member, Bill Trythall. 

View from the Coalface - The role of trade unionists as pension trustees

This picture is from the panel seminar last week at the "Workplace Pension 2015" conference in Birmingham.

I was with Bill Trythall, who is a fellow AMNT union appointed trustee on the massive USS Pension scheme. The chair was Louise Farrand from "Engaged Investor".

We took a number of questions from the chair and members of the audience on amongst other things - time limits for trustees on schemes; do trade unions help bring diversity and how can we tell if our pension board is any good?

My response (and since I was obviously not making notes I won't report on what Bill said) was "Yes", we should have time limits on trustees serving on a board. It is wrong that people like me have been on boards for 20 years. We need new blood and realistic succession plans. But so should all our professional advisors be similarly time limited to 5-10 years maximum. 

I think that trade unions do help drive the diversity agenda, since not only is equality and fairness a reason for our existence, we know that if a company does not recruit, for example, any women to its board, then it is is ignoring the potential talent pool from half the population. That is a bad business decision and ignorant companies who do so will suffer in the long term. 

This has nothing to do with political correctness but a well founded belief that companies who don't discriminate, do not  cause harm to its workers, destroy the environment, employ child labour or bribe public officials will in the long run be far more successful businesses to invest in than does that do.

My response to how we can tell if we are doing a good job or not as pension trustees will be to see firstly how we perform according to our benchmark, when compared to our peers and at our triennial valuations. But also we should see how open and transparent we are with our members and other stakeholders, do we seriously challenge our advisors, how realistic are our assumptions about future performance and liabilities, do we really drill down on all our fees and transaction costs and do we take our responsibilities as owners of capital seriously?

We ran out of time at the end but I think that Bill and I enjoyed the seminar and hopefully those who watched and participated did so likewise.

AMNT stall at Workplace Pensions Live 2015

On Thursday I went for a flying visit to Edgbaston, Birmingham to take part in a panel on the second day of Workplace Pensions conference.

The theme of the panel was "View from the coalfield - This session will explore the role of unions on trustee boards, and the conflicts union members may face in their interactions with employers and members".

I was speaking with Bill Trythall (see on right of picture), a trade union appointed director, of the massive university pension fund USS.

The session went okay I think and afterwards Bill and I joined our colleagues at the Association of Member Nominated Trustees (AMNT) stall.

I had to rush back to London for the Newham Council AGM. 

Red Lines - How to start an Investment Governance Revolution

(this post was pulled in January since I didn't realise that we had to wait until formal launch of Red Lines which took place yesterday. I will post further on this "revolutionary" proposal)

Picture is from last weeks workshop on "Red Lines" run jointly with the AMNT (Association of Member Nominated Trustees) and UKSIF (United Kingdom Sustainable  Investment & Finance Forum)

AMNT co-chair Janice Turner talks about her "Red Lines" idea to the audience.

Pension funds are blamed for being partly responsible for the crash of 2008. As asset owners they were "asleep at the wheel" and did not take their responsibility seriously and allowed the banks and financial institutions to nearly destroy our economy and seriously damage our investments.

What "Red Lines" hopes to do is to allow all pension funds regardless of size assert their rights of ownership on the assets they own and are responsible for. Small pension funds do not have a voice even though they are estimated to own £300 billion of assets. Large pension funds can afford to engage with their fund managers and the companies they own but they always lose important votes at company AGMs since most fund managers interests are not aligned with asset owner interests.

In a telling phrase from AMNT activist Bill Trythall (on left of photo) there are "Armies without generals and generals without armies".
 
Janice compared the current arrangements with the electoral system in the 18th Century when only the rich and powerful had a vote.

What  "Red Lines" is about is small and large pension funds, as well as a wide range of other charitable and ethical funds, agreeing a common set of Environment, Social and Governance (ESG) beliefs and instructing their fund managers to vote in a certain way or explain why not.

The devil will be in the detail of course but it should not be beyond the wit of man or woman to agree a common set of voting instructions to fund managers on issues based, for example, on the UK Stewardship Code or the United Nations Compact on Human Rights.

If companies do not comply with "Red Lines" instructions without good reason then fund managers should vote against the Board at AGMs and if fund managers do not comply without good reason, then they should run the risk of being sacked by trustees.

After speeches there were various workshops on how to formulate and enable "Red Lines". It is at an early stage and is going to be a time consuming and difficult process to bring about but potentially "Red Lines" will indeed revolutionise governance practices and bring about more responsible ownership and accountability.

Pension Minister Steve Webb MP to address AMNT 26 June 2013

Association of Member Nominated Trustees

Pensions Minister Steve Webb MP will be the keynote speaker at our first AMNT Summer Conference which will take place on June 26th 2013, at Towers Watson, 21, Tothill Street, London SW1H 9LL. Some details are still to be finalised, but currently, the day looks like this:

We will begin with registration from 0930, and the main conference starts at 1000.
Steve Webb has agreed to start us off with a keynote speech.

Then Co-Chair Barry Parr will go through the results of our Member Survey.
Bill Trythall (Committee Member) will then talk on "The Universities Superannuation Scheme".

After coffee, Ewan McGaughey will talk on "MNTs in Corporate Governance", then another Member will talk on "A Smaller DC Scheme".

Lunch and networking will be followed by our hosts Towers Watson talking on Current Pension Issues, then John Gray (Committee Member) will present on "London Borough/Local Government Schemes".

Following this, Michael Johnson will speak on "Charging in Pensions".

After a tea break, our Friends will leave us, and we will go into Round Table Debates on Current Pensions Issues with one of our Sponsors leading each table.

A final feedback session will be followed by a closing summary, which is due to finish at 1700.

After the meeting has closed, there will be the usual networking opportunity with drinks provided by our hosts Towers Watson

There are limited places available for this event, so please let us know as soon as possible if you are able to attend. Click on one of the below links and let us know by email, including whether you have any dietary requirements and if you plan to attend for the drinks reception.

Email mail@amnt.org if you wish to send the whole or part of the day at the meeting.

(if you are a member nominated Trustee or representative then join and apply to attend)