ShareAction Summer thank you 2017

Picture collage from Thursday evening "thank you event" in Brick Lane, East London for supporters of ShareAction - a campaigning body "to make investment a force for the good". 

It was great to meet so many people concerned about the power and impact of our collective investments. I met for the first time their CEO Catherine Howarth's children and her wonderful Mum!

I also had a chat with the Red City of London, Peter Kenyon; was lectured at by a pompous Green, entertained by Henry Tapper; spoke to two authors on Pension Governance and was really pleased to see that "Professional Pensions" won the "award" for "Strongest Coverage" of Responsible Investment. Well done to Stephanie and Jonathan.

As was mentioned at the event, the really exciting thing is that ShareAction are winning the argument...

Workers' Capital in the 21st Century: ShareAction Annual Lecture with Sharan Burrow

The keynote speaker at this years ShareAction annual lecture in the historic Conway Hall, Red Lion Square, London was the General Secretary of the International Trade Union Confederation, Sharan Burrow.  The ITUC is the global version of the British TUC.

Sharan give a well argued and passionate speech on "Workers Capital" (the pension investments and other savings of workers) and in favour of using it to support climate transition while respecting fossil fuel workers and their contribution to our prosperity.

She repeated her mantra that I first heard her say at the recent CWC meeting last month "there are no jobs in a dead planet".  While she welcomed the green "disinvestment warriors" present who would want pension funds to immediately pull out of investing in Carbon industries such as Coal and Oil, she did favour engagement with firms if they are willing to take part in transition. Some will earn our trust.

              

If companies refuse to change then we do have the powerful leverage of disinvestment by our pension funds. We are close to losing the Climate Change War and must act if our politicians fail to regulate.

Sharan praised the TUC for setting up "Trade Union Share Owners" where trade union staff pension funds collectively vote their share holding and she hoped other national unions would do the same. Also ShareAction for its success in furthering the Living Wage.  She thought that the election of Jeremy Corbyn as Labour Party leader was a great symbol of the possible. 

                         

Her closing remarks was the battle cry "Zero Carbon, Zero Poverty".

Next Speaker was Gail Cartmail from Unite, who spoke about role that unions can play by representing the interests of their members investments, Colin Meech from UNISON who talked about the need to control costs of our pension funds like they do in Holland, while Jeannie Drake reflected that many workers do not have unions in their workplace and have contract not trust based pensions, so how do we leverage their capital?

There was then a Q&A during which Green Party leader, Natalie Bennett, asks whether there are civil Liberty groups present today and can we work together? I tried to ask a question but wasn't called on how trades unions generally will have to raise their game and give practical support and guidance to pension trustees if we want them to pursue a progressive agenda on climate change.                             

Catherine Howarth from ShareAction closed this successful event with a call for a legally binding "Charter of Rights" for investors and owners. 

The Case for the Living Wage - Why a Living Wage Pays Dividends

Thursday evening I went to a well attended ShareAction event to mark "Living Wage" week and the launch of their latest "Investor Briefing" on the business case for a Living Wage.

Rhys Moore, the director of the Living Wage Foundation, spoke first about the doubling of employers who now pay a living wage in the last 12 months. It is now £9.15 per hour in London and £7.85 in the rest of the country. The national minimum wage is only £6.50 per hour. The Living Wage is about 70% of the medium national income while the international definition for poverty is 60%. Last year there was only 5 FT100 companies who paid a living wage, now there is 19.

Rhys thinks that a living wage is becoming a norm for responsible employers. Research shows that 25% of workers who earn less than a living wage, do not work in a "low pay" sector. The foundation are about to launch a living wage "consumer movement" to encourage people to "buy" only at living wage employers.

Next speaker was Phillipa Birtwell from Barclays Bank, who is its "Head of Reputational Risk" and told us about their ground breaking agreement in 2004 with the community group TELCO, over cleaners being paid a living wage at their Canary Wharf offices. Even though only 200 workers were involved, the story went  "viral". The benefits of applying a living wage is a fantastic human interest story.

Lisa Nathan from ShareAction spoke about the investor benefits from a living wage such as staff retention and reduction in turnover, reduced absenteeism and improved morale leading to increased productivity.

As well as being a corporate citizenship issue there is also a macro economic growth argument since if those who are paid the least, get a pay rise, they will spend it locally and boost demand.

Finally, there was a panel (see my pretty rubbish photograph above) with Cllr Richard Greening, Chair of Islington Council Pension Fund; Janice Turner, Vice Chair of the Association of Member Nominated Trustees (AMNT); Sarah Smart, Chair of the Pension Trust, James Corah from CCLA and chair Catherine Howarth.

Richard explained how 98% of all its employees are on a living wage, the only major area that they are not is a Private Finance Initiative (PFI) providing residential care. As a member of LAPFF they are also trying to control executive pay. He believes that the living wage campaign is now at a tipping point and becoming main stream.

Janice from the AMNT talked about an exciting new initiative which could have an significant impact on the living wage. At the moment the vast majority of votes at company annual general meetings are automatically voted in favour of management. Fund managers who do this are not held to account. The AMNT in partnership with others, is trying to draw up "Red Lines" voting guidelines. Pension funds of all sizes could agree to adopt a common set of voting instructions on Governance issues. So it could (this is early days) mean that fund managers are instructed to vote against any company that does not have all its staff on a living wage and and no future plans to do so.

Sarah explained that the Pension Trust was a £6 billion pension fund that caters for the "not for profit" sector. While its primary purpose is of course to meet its pension obligations, she doesn't think that companies paying a living wage is a huge investment problem. Pension funds are for the long term and believe in responsible investment. The Pension Trust recently became a Living Wage employer. The contract cleaners in their head office in Leeds had a pay rise of £1 per hour which has made a big difference to their lives.

Last speaker was James from ethical fund managers CCLA who were hosting this event. He quoted sections from the famous classical economic textbook "The Wealth of Nations" which appear to support the arguments for a living wage. He pointed out therefore that both the author Adam Smith and the Bank of England argue for a living wage.

In the Q&A I made a comment that as a pension trustee we believe that we will get better returns in the long run if we invest in well governed and responsible companies.  For example, those who treat their staff well, who do not destroy the environment, bribe public officials etc.  As investors we must be concerned with the substainablity of companies whose entire business model is dependent on paying its staff poverty wages and being reliant on state benefits to exist. 

Implications of Climate Change for Investment Returns and for Beneficiaries: AMNT Open Day

This is the first in series of posts on last weeks AMNT open meeting and AGM.

I was really pleased to see that there was a quite a few UNISON LGPS member nominated reps present.

The morning was a training session on the implications of Climate Change on Investment returns and for our Beneficiaries. Bearing in mind the very unusal weather we have been having this winter, this is a very topical subject.

Our meeting was opened by our Joint Chair Barry Parr who introduced Catherine Howarth. (see picture) who is a former pension trustee and the CEO of ShareAction (use to be called "Fair Pensions").

Catherine believes that Trust schemes have clear duties to take Climate Change seriously but with Contract schemes it is less clear legally but still a compelling reason to act.

She spoke about the Greenlight report launched recently with Pension Minister Steve Webb MP. There is a need to "nudge" pension schemes into managing the growing risk of climate change. There are a number of good schemes that are addressing this but many others who clearly "don't get it".

One sign of a good scheme is how well it communicates with its members.  Schemes needs to organise relevant training, look at governance policy development and carry out risk assessments. Need to look at low carbon investment opportunities and take into account that Auto-enrolment will bring in many young people into pension schemes, who will bear all the investment risk  of climate change in the coming decades.

Next was a speaker from PRI then climate change expert Meg Brown.

Our Money, Our Business: Building a more accountable investment system

Yesterday evening I went to the launch of two new reports by ShareAction at the Nuffield Foundation in central London. Chaired by their CEO, Catherine Howarth.

Christine Berry from ShareAction presented on the reports "Our Money, Our Business: Building a more accountable  investment system" and "Engaging savers with stewardship and responsible investment".

Christine argued that in light of pension auto enrolment we need to revisit ideas such as those expressed in the book by David Pitt-Watson, "The New Capitalists", since there will now be a huge expansion of share owners. However, at the moment share owner governance is a "dead duck" and we need to reassert the legitimacy of shareholders as owners. We also need to counter the idea that no one is really interested in what happens to their savings.

Research by the Pension Trust (whose chair Sarah Smart was sitting in the same row as me) suggested that its members were not that interested in whether their fund was invested in the traditional "sin stocks" (such as tobacco) but were interested in environmental issues and labour rights.

The first speaker was Mark Fawcett from NEST who pointed out that in modern day Direct Contribution (DC) schemes, savers are exposed to all the risk then it is likely that members will have to take a more active interest in their savings (whether they like it or not).

Roger Urwin from advisers, Towers Watson, was concerned that the reports were important but maybe heavy on aspiration and light on what could be catalysts to bring about change.

Charlotte Black, from high net worth private investor manager, Brewin Dolphin, thought this was an important issue and could show the good side of capitalism but her 120,000 investors had never used the proxy share voting system she had put in place.

My question to the panel was that we need to have better and stronger representative democracy by a elected trustee based model. Advisers are very important but they do not have the fiduciary duty or mandate that elected member nominated trustees will have. Saying that, trustees do have to raise their game and become better trained and more assertive but they do need support.

(good luck to Christine who is soon leaving ShareAction for a new job.)

UNISON Local Government Pension Scheme Seminar 2013

Last week I chaired this well attended national seminar at the UNISON Centre in London on the Local Government Pension Scheme (LGPS). There were about 90 UNISON LGPS activists from all over the UK.

The stated aim of the day was to explore the outcomes of the implementation of the Hutton Review and understand the huge developments that have since taken place.

First speaker was UNISON National Secretary and LGPS Shadow Board member, Jon Richards. Jon gave a sober update on the ongoing and often tortuous negotiations between the Board and its various components - the Unions, the Local Government Association, the DCLG  and the Treasury on the future costing and governance of the LGPS.

He has discovered that some parties are now suggesting that they should not be subject to past agreements since they did not understand at the time what these original agreements meant! Jon warned us that we must not just rely on what national officers can deliver but must organise and argue locally for change and must act and think as equals in all these negotiations.We have a job of work to do.

Next was UNISON Pension officer, Glyn Jenkins who gave the first of a 2 part presentation on the technical negotiations on future benefits for LGPS 2014.

National Capital Stewardship officer (and seminar lead) Colin Meech gave a call to arms for everyone present to organise and plan for us to have 50/50 member representation on all 89 England and Wales LGPS pension boards. We all need to step up to the challenge ahead of us.

Financial Academic, Dr Chris Seir (see picture left speaking - a former Police officer, past investment adviser but still a martial arts expert) gave a convincing insider argument that our pension funds are being ripped off by excess and unnecessary fees and charges.

Karen Thrumble from Statestreet didn't quite agree with everything that Chris had said. She did have concerns about the advice of some LGPS investment advisers on certain expensive products and while did not think there was sufficient research to say that "big is always best" in the size of LGPS funds, she did think that bigger funds tended to produce better returns since they could invest more cheaply in-house and be less complex.

UNISON South West region organiser and an employee nominated trustee on our staff Pension scheme, Jon Dunn, reminded us that socially responsible investment (SRI) should be at the heart of everything we do as pension trustees. The TUC and a number of major unions including UNISON had recently set up "Trade Union Share Owners" (TUSO) on voting shares at company AGM's and engagement to try and make sure this happens with our workers capital.

Next was Jackie Hamer, who is a UNISON lay activist and is a member nominated rep on the Environment Agency pension fund which is part of the LGPS family. The governance and SRI arrangements in her almost fully funded open Defined Benefit scheme are an exemplifier with 50/50 employer/employee representation.

Catherine Howarth from the pension watchdog, ShareAction (specialist subject upsetting Pension fund administrators and Company Chairs at their shareholder AGMs) gave a great example of the potential power of Pension trustees and beneficiaries by showing how their campaign had helped result in an increase of top FTSE companies paying a Living wage from 2 to 11 to all its UK staff and subcontractors.

Final speaker was Glyn Jenkins again who gave a typical "belt and braces" overview of what LGPS 2014 technical benefit changes will mean to our members. All of us can now expect lots and lots of case work from LGPS members with long service who have reached the magic age of 55.

While we are not allowed to give financial advice I think you need to ask members if they retire early at that age (by choice and not due to ill health or redundancy which have very different consequences) with all the penalties, do they really want to risk dying in poverty?

In my closing comments I thanked the organisers and speakers for a great seminar. I had been told by one representative during the tea break that this had been the best event laid on by UNISON that he had ever attended! I repeated Jon Richards earlier call for action, that it is up to all of us, lay activists and organisers, at every level to act and defend the long term interests of our pensions.

AMNT Open meeting 26 September 2013

Photo college is from the recent open meeting of the Association of Member Nominated Trustees.

The first agenda item was a presentation on "DB Schemes: Solvent Employer, wind-up or buyout" with AMNT Executive member Robin Bell and Louise Inward from our hosts at the Pension Insurance Corporation. Which used the Pension Regulator "On line" trustee toolkit to work out the problems and pitfalls facing a DB scheme in trouble.

Next was Joint Chair, Janice Turner who briefed everyone about current AMNT activities. Our membership has continued to grow. We have made significant contributions to government and regulatory policy on pensions and trusteeship. We have held successful and well attended open meetings and make our presence known by speaking in conferences and writing articles for the pension press.

We have been successful in our fund raising and have now employed an administrator, Kate Bendy, on a part time basis to support the AMNT objectives and our volunteer executive committee.

Pension Minister Steve Webb MP, was our keynote speaker and took part in a Q&A at our Summer Conference. Ewan McGaughey, a researcher from the London School of Economics, at the summer conference described the AMNT as “unique” and “the most important development in Pension Governance in 50 years”

We launched our AMNT DC and Auto-enrolment video kindly developed with Barings Asset Manager.

The picture of our other Vice Chair of the AMNT, “Red” Barry Parr, was on the front cover of July 2013 “Pensions Insight” magazine. Janice also mentioned my award as “Most influential Trustee” at the Mallowstreet Awards September 2013.

Next I spoke to the meeting about the latest updated edition of our hard hitting AMNT "Defend DB schemes" guide which all trustees whose sponsor wants to close their schemes either to new members or future accrual should consider. We also offer our members individual advice and support if they are going thorough this process. Modern defined benefit pension schemes are as affordable and sustainable as they have ever been. This guide is for members only.

Afterwards Catherine Howarth from ShareAction and Luke Hildyard from the High Pay Centre (see main picture) spoke about "Responsible investing: what corporate factors influence investment returns? Is high executive pay an issue for trustees?" Many asset owners believe they are being ripped by their senior executives. Catherine argues that Pension funds should publish their fund managers voting decisions so that they can be held to account. They should also develop their own voting policy on Executive pay and make sure that fund managers follow it.

Luke beleives that high pay ratios demoralise employee base, they create more conflict, more costs, less productivity. Massive pay attracts the wrong people, it creates false sense of invincibility and
lavish pay policies lead to poor performance, poor decisions and poor value for shareholders.

After lunch we had AMNT member Martin Taylor (bottom right) and a call to action on "What's to be done about fees and charges?". Martin would like trustees to work collaboratively together to drive down fees and charges.

David Barker from the Mercer DC and Saving team who argued that while there was still some awful bad value DC pensions schemes in the UK that the industry had improved dramatically in recent years. He also pointed out the the big Australian DC schemes treated non active members badly and that the big Dutch pension schemes that everyone raved about were currently in the process of reducing pensions of those currently retired. Which could not happen in the UK.

I then had to leave before the end of the day but I understand that the presentation by Terri-Ann Humphreys from the Pension Management Institute (PMI) went really well. The PMI set exams and standards for much of the pension world and it is everyone's benefit that the AMNT and the PMI work closely together.I also missed "Ensuring good governance of DC schemes (and DB too!)" and "How do you keep control of outsourced services" by Jamie Dobbin from PIC.

Our next AMNT open meeting will be at the House of Commons with Shadow Minister of Pensions Gregg McClymont MP on Wednesday 27 November 2013. Details to follow.

Al Gore speaks at "Harnessing Capital Markets for a Sustainable Future"

This post is about the speech that former US Vice President Al Gore gave at the ShareAction (formerly Fair Pensions) annual lecture on March 15 in the City of London Guildhall.

By coincidence I was sitting next to UNISON Assistant General Secretary, Liz Snape and her eldest daughter.

The Lord Mayor of London welcomed the (packed) audience to this historic site. Catherine Howarth, the CEO of ShareAction spoke about the dominate role that finance plays in our economy and the impact on democracy. Also what impact pension auto enrolment will have when many millions of people will become shareholders for the first time.

Then “The Al Gore” came onto the stage. I must admit that I didn’t know that much about Al Gore but you have to admire the massively impressive, articulate, passionate, old fashioned barn storming 30 minute speech he gave. He put nearly all UK political speakers to shame.

I hadn’t realised either that he had started off life as a Tennessee farmer and he gave a typical folksy small town America tale (“I’m feeling fine – don’t shoot me”) which I have heard before but never said so well, which was to amuse and relax the audience.

He then praised capitalism as the most efficient and superior economic system there has ever been, then tore it down by reminding us of its many failings such as its inability to measure what is truly important such as social well being and climate change. He asked why is the atmosphere used as a carbon sewer?

He discussed the fiduciary duties of pension funds and the mandates and incentives given to fund managers. Why do pension fund managers only concentrate on the short term? – because that is what the pension fund trustees pay them to do!

In the Q&A I asked him as a UNISON trade union pension trustee if the failure of pension funds to make long term sustainable investments is due in part to the decline in recent decades of organised Labour. In the past workers and managers worked together as partners. He said he had never been asked that question before but would think about it (which meant he either thought it was a brilliant unique insight... or that no other idiot had ever asked such as stupid question before). He did say that union nominated trustees can make a real difference to the way their funds are managed.

He asked us to think about what are the values in the boardroom you invest in, how does a company treat its employees and the communities where they operate. There should be a systematic investigation of sustainability factors as a necessary part of any investment process. The current system is functionally insane and incentives drive towards systemically irrational decisions.

(and I agree Mr Vice President).

Fair Pensions Living Wage Standards (& poverty pay Metropolitan)

Late yesterday I attended most of a briefing by Fair Pensions on their campaign to get a Living Wage for all employees and subcontractors of the FTSE 100.

Check out my twitter feed for 5 November for some of the stuff I found interesting.

Some key points from seminar: Fair Pensions CEO Catherine Howarth, that they had some form of contact with 50% of FTSE 100 companies and 11% are or will be Living Wage employers.

While Rhys Morgan, the Director of the Living Wage Foundation said that 80% of employers who pay a living wage found that quality of work was improved. I was glad that he also quoted Labour Leader Ed Miliband as saying that a Living wage was "important but not the summit of our ambitions". UNISON argues for a Living Wage "plus" - not just £8.30 per hour (as welcome as it is) but also decent sickness pay, pensions, annual leave as well as trade union recognition and collective bargaining.

I had to leave early for a Pension committee meeting.

It is also rather ironic that during the "Living Wage week" that UNISON is running a campaign against Metropolitan Housing Association, which claims to be a charity and responsible employer.  Yet it paid £412,000 to get rid of its former CEO, while at the same time planning to pay its care workers less than a living wage and employ part time staff on poverty rates, so their their wages will be topped up by the taxpayer. How completely disgusting and shameful.

If you work for Metropolitan or want to show solidarity sign the Petition here and read the comments by staff who in 2012 face being forced below the poverty line not above.  

AMNT open meeting to members next Tuesday June 20

Association of Member Nominated Trustees. There is an open meeting of the AMNT next Tuesday 20 June at AXA Investment Managers’ London offices, 7 Newgate Street. London. Starting 1.30pm (sandwich lunch beforehand) and finishes 5.30pm (followed by drink and nibbles).

AMNT member and chief executive of Fair Pensions Catherine Howarth will give a presentation into the ‘Shareholder Spring’ and what it means for trustees.

Jonathan Bull of OPDU will also give a talk on the types of insurance available to trustees and what MNTs can to do to limit their own personal risk.

Followed by a report from the AMNT committee and breakout sessions on member concerns.

I have drafted a paper for the AMNT on "what to do if your employer wants to close your Defined Benefit Scheme". Which may be discussed either this meeting or the next. I'm at the UNISON conference next Tuesday so can't make it.

Find out more about the AMNT and join here. Email mail@amnt.org to apply if you want to attend.

Executive Remuneration – free seminar for pension fund trustees

Executive Remuneration – free seminar for pension fund trustees

Co-hosted by the TUC and Fair Pensions 2.00 – 3.30pm, Monday 21 May, Congress House with speakers:

Frances O’Grady, TUC Deputy General Secretary

Iain Richards, Head of Governance and Responsible Investment, Threadneedle Investments

Catherine Howarth, Chief Executive, Fair Pensions

Are current levels and rates of increase of executive remuneration fair and transparent? Are fund managers reflecting the views of beneficiaries in their engagement with companies on executive pay? What can pension fund trustees do to bring about improved practice in the area of executive remuneration?

You are invited to discuss these and other questions at a free seminar for pension fund trustees hosted by the TUC and Fair Pensions taking place from 2pm – 3.30pm on Monday 21st May, in Congress House, Great Russell Street, London WC1B 3LS.

 

Fair Pensions has produced a briefing for trustees on executive remuneration, which can be found at http://www.fairpensions.org.uk/sites/default/files/uploaded_files/investorresources/ExecutivePay2012.pdf

To register for the seminar, please e-mail trusteenetwork@tuc.org.uk

The Enlightened Shareholder

Last week I went to the launch at the House of Commons of the report "The Enlightened Shareholder: Clarifying investors'

fiduciary duties" by Fair Pensions.

The speakers included "Professor John Kay, who is currently leading a review which looks into long-termism in the UK equities market; Saker Nusseibah, Acting CEO of Hermes; Roger Urwin, Global Head of Investment Content at Towers Watson and Baroness Jeannie Drake".  Fair Pensions CEO, Catherine Howarth, chaired the meeting and its author, Christine Berry presented the report.

The big issue is whether or not the "fiduciary duty" of shareholder representatives (and trustees) ought to be legally redefined to deal with "crony capitalism and excessive executive pay". Pension trustees (and member nominated representatives) still come across advisers who tell them (completely wrongly I think) that  their only role is to "maximise returns" of the scheme regardless of the impact it has on stakeholders, the wider economy and even the long term interests of the scheme. Which is clearly stupid and frankly bonkers. But it happens and it needs to be dealt with.

I think this problem is widely recognised but there is the usual dispute about the solution. Should this be by statutory regulation or some sort of a voluntary code? As pointed out in the debate we have tried the voluntary approach for a long, long time. It has clearly failed due to agent self interests and conflicts. We need to regulate.

"Can pension funds shape the future of capitalism?"

Catching up on things. Last month I went straight from the TUC Trustee Pension Conference to the Fair Pension's Guest Lecture at the House of Commons. This was the second presentation I had been to that day on "Capitalism and pensions". I was with a notoriously quiet and reserved UNISON colleague who is a Local Government Pension (LGPS) expert. The lecture was given by Professor Keith Ambachtsheer, Director of the Rotman Institute for Pension Management (left of picture).

He was introduced by John Cruddas MP who is the Chair of the All Party Parliamentary Committee for Responsible Investment. The meeting was Chaired by Catherine Howarth of Fair Pensions.

You can read an account of his speech (and that of Mark Fawcett, Chief Investment Officer at NEST - right of picture) and the full text here. My take on Ambachtsheer is that he believes that Capitalism must be transformed by those who invest in pensions acting as active owners and demanding that capitalism is transformed into a sustainable and wealth creating model. Rather than mainly benefiting "agents" and being subject to their whims.

What I also found striking in his speech was that the traditional argument over pensions about which is best: Defined Benefit or Defined Contribution? Is the wrong question to ask. Instead you should be more concerned with Scale (size of fund), Governance, Investment belief and Fees.  I asked a question about the Local Government Pensions Scheme (LGPS) which has around £140 billion in assets but is split into 101 different funds. Ambachtsheer thought this was just completely wrong to have so many small funds.

Afterwards we went to the St Stephens Tavern where we had some very "interesting" conversations about the future of the LGPS from across the political divide.