PIRC Corporate Governance & Responsible Investment Journalism Awards 2013

On Wednesday evening I went to the PIRC awards at the Design Museum on the south bank of London.

The winning journalists were Tom Bergin from Reuters (2nd left) who won the Corporate Governance Award for stories on tax dodging by Google. 

While Rob Davies (3rd from left) from the Daily Mail won the SRI award for his work on polluting mining giant Glencore (now who would think there was good in the Daily Mail?).

I suppose that I should ask PIRC MD, Alan MacDougall (on right of photo) why there isn't an award for CG or RI Blogging?  Or is this a contradiction in terms? :)  Must ask Tom P (who was poorly last week and missed the event).

Pensions Age article on Rana Plaza Building Collapse.

This is a short article I wrote on behalf of the Associated Member Nominated Trustees (AMNT) for Pensions Age magazine last month (sorry can't find on line link).  See my previous post
on this wholly avoidable mass killing.

"I’m sure that everyone who watched the TV footage of the collapsed Rana Plaza building in Bangladesh would have been shocked and horrified. The death toll is now more than 1100. The reasons for the collapse are unclear but there has been suggestions that alterations to the building were made without official planning permission and allegations of local bribery and corruption.

UK clothing retailer Primark who sold goods produced in this building (which is owned by FTSE 100 Associated British Foods) has offered to help with compensation payments. This is all very good but the question that pension trustees should consider at their next board meeting is this.

Have they done all they can to ensure that the companies they invest and partly own take all reasonable steps to ensure that their supply lines do not profit from potential death traps?

To be clear, the direct responsibility for Rana Plaza lies in the hands of its owners and State authorities. However, as owners of companies that have benefited from the production of cheap clothing we also have a duty.

We need to make sure that our fund managers know that not only do we care about what is done in our name and with our money but we believe it makes long term financial sense that we only do business with companies that can demonstrate they take all their responsibilities seriously".

"Active Responsible and Engagement Investment Approaches: Do they deliver positive returns?"

Last Tuesday evening I went to a seminar organised by the Pension Investment Academy and the University of Westminster Business School(Marylebone Campus) via the AMNT. The seminar was about whether responsible investment and engagement approaches actually work. Which is a pretty fundamental topic I posted on recently here.

Why I believe as a pension investor and trustee that investments should be made in a social responsible manner. I have to ask what empirical proof or evidence is there that such a policy actually achieves a positive return especially when compared to investments on behalf of those who don't worry what happens to their investments as long as they make money. 

I can remember being told many years ago that it is the duty of pension trustees to maximise the performance of their fund and nothing else. Which is clearly nonsense (then and now).

There was a pretty high powered panel of speakers from the Pension Protection Fund, Mercer, BT Pension fund and Henderson Global Investors.

The good news is that it seems that there is now research that engagement can add to returns and could reduce risk and volatility. However, the evidence is so far patchy. Certainly there is the argument that such active stewardship in Banks could make a "rerun" of the recent global banking disaster "materially less likely" (Walker Review 2009).

In the Q&A I did respond to the points made by some members of the panel that voluntary regulation is better than the state being involved, by saying that the lessons from the Banking crisis is that laissez faire capitalism failed and that you need more state regulation not less.

Also that until our investment advisers start advising trustees that it does make financial sense for the fund to be active then most trustees will not have the confidence to do so. Many fund managers (not all) in my experience see SRI as a unnecessary interference  in their right to manage money as they see fit. They simply pretend otherwise to win and keep business.  Regardless of the Stewardship Code you will need the support of your advisers to take them on.

Update: evidence on positive returns by Helene Winch from BTPF  here ; here; here and here 

Hat tip cartoon Kevin Wong

(I spent 3 years on a day release at the Westminster University site in the late 1990's to do a CIH post-graduate diploma. It was nice to be back but due to expansion and building works the campus is now unrecognisable).