1. The Institute of Company Secretaries of India
Governance, risk management and compliance: Global perspective
Gearing up for global interface
31 August 2018
Tim Sheehy
Director General, ICSA

2. Governance practices are global - the drivers
Growth in worldwide pensions - (US$26bn in 2007 to US$41bn in 2017) has put pressure on funds to ensure sustained growth through good governance
Organised institutional investors through stewardship codes are defining engagement in the major capital markets
Sustainability and the social contract to operate are the key issues
Corporate secretaries can be in the driver’s seat

3. Issues for pension funds
Pension design, towards a direct contribution model
Bigger impact from evolved regulations
Governance issues are challenging
Culture makes a difference
Sustainability and long- horizon investing
Technology rising
© 2018 Willis Towers Watson.

4. Organised institutional investors
Large institutional investors (pension funds, sovereign wealth funds) now exert significant pressure for better governance - Calipers, ACSI, Blackrock, Canadian Pension plan
30-year horizon and cannot sell out of large companies
Driving force behind the emergence of Stewardship Codes – UK, Italy, Japan, Brazil, Canada, EU, Kenya, Malaysia, Singapore – 14 in all

5. Current trends in engagement
High expectations for companies to engage with their institutional investors
Investors want access to the Chair and a regular dialogue
ESG is the growth topic as is risk management and cyber risk
Trends are the same whether in developed or developing markets

6. Methods of engagement: ICSA/OECD research

7. Topics discussed: ICSA/OECD research

8. Engagement and social contract: today’s governance ‘issue’.
Social impact, climate change, and diversity…are among the phrases and issues being raised by today’s major institutional investors. Forbes magazine
“The large influx of capital into passive index funds–now [comprising] 42 percent of all publically traded funds–has put more pressure on the BlackRocks, the Vanguards…to align themselves with…long-term strategic investment as opposed to short-termism.” Forbes magazine
3 Ways Shareholder Engagement Has Evolved PwC
Investors expect direct engagement with the board
Long-termism has become the golden standard
Best practices guidelines for engagement are everywhere

9. ASX Principles – just one example
Principle 3: return of the social contract?
Current: A listed entity should act ethically and responsibly”
Proposed: A listed entity should instill and continually reinforce a culture across the organisation of acting lawfully, ethically and in a socially responsible manner.

10. The corporate secretary in the driver’s seat
Issuers and investors engage via the company secretary in many companies
Institutional investors, aside from performance, focus on the governance of who they invest it…and often turn to the chair and company secretary for insight
The company secretary occupies that unique position as the link between the board, management and shareholders
The company secretary is best placed to be the champion of good governance within their organisation