Why better governance is an integral part of D&I

In the investment sector, investors, customers and employees want purpose-led leadership

DiversityQ joins sister publications ESG Clarity, Expert Investor, International Adviser, and Portfolio Adviser in the “Campaign for Better Governance” that wants investment professionals to improve their internal governance “for the greater benefit of their businesses and those they serve.”

The aim of the campaign is for the investment industry to “increase its focus inwardly”, according to Global Head of ESG Insight and ESG Clarity‘s Editor, Natalie Kenway.

Speaking in a new ESG Out Loud podcast entitled: “Campaigning for better governance and sustaining oceans,” she explained how factors, including the global financial crisis and the Woodford scandal, had damaged trust in the investment industry. However, more recently, she said the pandemic had seen company treatment of stakeholders put under “intense scrutiny.”

DiversityQ’s Editor Cheryl Cole explained how good governance in the investment industry was an integral part of workplace diversity and inclusion, where better governance included “having robust ways of working, people management and processes”, where growing pressure from investors, customers, and employees is causing CEOs to focus on purpose and long-term value creation over short-term gains.

Kenway added that the governance part of ESG had long been overlooked. Still, cases like the Woodford scandal have brought renewed attention where investors that promote responsibly made products are now being expected to run their own companies in the way that stakeholders now expect them to.

Speakers featured in the podcast agreed that there is a new focus on how investment teams manage assets where reputational risk is a growing concern and where fund managers are more likely to be challenged.

In a released statement by the campaign’s organisers, they said: “At a time of unprecedented interest in environmental, social and governance (ESG) oriented investing and following a period when companies’ treatment of all their stakeholders amid the global pandemic has been under intense scrutiny, we believe the investment sector should be practising what it preaches and ensuring that, alongside the businesses to which it allocates capital, its own governance is at the highest possible level.

“In light of recent events, there has surely never been a better time to focus on the often-overlooked ‘G’ of ESG. Fund managers – particularly those who set out to invest responsibly – engage with investee companies on a regular basis and are well-placed to use their significant power as shareholders to encourage or discourage particular policies and behaviours. There has been a noticeable increase too in the number of engagement reports published by asset managers highlighting the might and influence they have on their investee companies.”

To find out more about the Campaign for Better Governance, listen to ESG Out Loud’s new podcast: “Campaigning for better governance and sustaining oceans” here.

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