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The Enlightened Shareholder
At a packed event in Parliament ShareAction officially launched its report "The Enlightened Shareholder: Clarifying investors' fiduciary duties". The report, which calls for legislative changes around fiduciary duties, comes the day after investors backed such a call in a letter to The Times. Speaking at the event were Professor Jon 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.
The report suggests that fiduciaries should be empowered to consider the broader impacts of their investment activities on beneficiaries' future spending power or quality of life, as long as this does not compromise investment performance. "Pension investments do not exist in a vacuum, but are a means to securing a decent retirement," it argues.
The report sets out detailed proposals for legislative clarification, modelled on directors' duties under the Companies Act 2006. It suggests that the Act's attempt to embed ‘enlightened shareholder value' into UK company law missed a vital piece of the puzzle by not tackling the perception that fiduciary shareholders are legally obliged to be unenlightened.
Catherine Howarth, Chief Executive of ShareAction, said:
"We're very pleased to see John Kay and many others engaging with this vital issue. Our proposed legislative changes would bring shareholders' duties into line with company directors' duties and enable fiduciaries to better serve savers' long-term interests."
The report is available to download here.
Journalists interesting in the report can get in touch with ShareAction here.