Pensions Investment Research Consultants has published principles of best practice for proxy voting and corporate governance advisers.
PIRC believes that voting advisory organisations, like itself, should display the same standards of accountability and openness which companies and institutional investors are expected to demonstrate. It has established the following principles, which are intended to be used as a framework for responsible behaviour for voting advisory services:
- clear voting policy guidelines should be made available;
- a clear audit trail and explanation of the process for assessing companies and making voting recommendations should be available to clients and the companies monitored;
- any possible conflicts of interest should be disclosed to clients and the companies monitored, and where necessary, to market regulators;
- companies monitored should be given reasonable opportunity to comment on voting recommendations made;
- voting agencies should routinely report to clients on actions taken on their behalf; and
- all voting recommendations made by a voting adviser should be publicly disclosed after the meeting.
PIRC intends to use these principles as a starting point for debate and as a benchmark to evaluate its own practice. The new principles should give companies the opportunity to comment in advance on any negative recommendations made by PIRC (and any other corporate governance advisers that choose to adopt these principles) and have greater opportunity to address concerns raised before the general meeting in question.
The PIRC principles of best practice can be found here.
