10 April 2024

ICGN: Proposed Revisions to the ICGN Global Stewardship Principles

The new draft presents a more succinct and cohesive narrative based around the following chapters:1. Stewardship commitment; 2. Robust governance; 3. Company monitoring and engagement; 4. Voting and other ownership rights; 5. Public policy advocacy

Main changes to the ICGN Global Stewardship Principles
The structure of the ICGN Global Stewardship Principles is substantially changed to remove superfluous, or duplicative language. The new draft presents a more succinct and cohesive narrative based around the following chapters:
1. Stewardship commitment
2. Robust governance
3. Company monitoring and engagement
4. Voting and other ownership rights
5. Public policy advocacy

Material additions to the ICGN Global Stewardship Principles are shown as underlined text throughout the document. Substantial edits concern:
1.4: Reference to the importance of investors having reliable data, research, and analysis to inform investment and stewardship decision-making.
3.4 Reference to the importance of investors supporting globally harmonised, corporate sustainability reporting and assurance frameworks to aid investment and stewardship decision-making.
3.7 Examples of engagement escalation tactics expanded to include: declaring voting intentions to the market before the shareholder meeting; amending a valuation model; and reducing the size of an investment in a portfolio.
3.9 New guidance on disclosure around engagement outcomes on a portfolio-wide basis and/or at company level, where relevant.
4.1 Clarification that, where an investor has influence over voting outcomes through significant shareholdings, they should explain how their voting aligned with the long-term best interests of the company, and if minority shareholders rights were adversely impacted.
5. New Principle and associated guidance included recommending that investors ‘consider public policy advocacy to mitigate market-wide issues or systemic risks, thereby safeguarding capital market efficiency, integrity, and resilience’.

Reference to some standalone guidance has been removed and absorbed implicitly in new drafting throughout. The following guidance from the 2020 version have been removed from the revised edition entirely:
4.5 Capital allocation
Creditors and shareholders should communicate their preferences as regards to capital allocation to company management. Effective engagement, bike creditors and shareholders must reflect the understanding that sustainable company must satisfy the basic and legitimate requirement of its capital providers.
5.5 Vote confirmation.
Where possible, investors should seek to confirm from companies, whether or not such voting instructions have been received and formally counted....

more full paper

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