The Independent Review Chair of the Best Practice Principles for Shareholder Voting Research & Analysis Group (the “BPPG”), Danielle A.M. Melis Ph.D. today (20-Feb-19) provided an update announcing significant progress achieved by the BPPG in Q1 2019, as part of the BPP Review to be completed by June 2019.
The Independent Review Chair is pleased to confirm the BPPG’s progress on introducing a new formal governance and oversight structure as part of the updated Principles and Guidance. This reflects the ambition of the BPPG to act in accordance with the highest standards and be transparent about their activities and policies, including formal policies and processes for management of conflicts of interest.
The introduction of the proposed new governance structure was a key recommendation from the December 2015 Follow-Up Report on the development and implementation of the Principles by the European Securities and Markets Authority, and was also supported by investors, companies and other stakeholders in the Public Consultation by BPPG completed in December 2017. The proposed new governance structure is complementary to the requirements set out in the revised EU Shareholder Rights Directive 2007/36/EC (“SRD II”), adopted on 3 April 2017 and due for implementation in 2019, as well as regulatory developments in other markets globally, since the Principles were introduced.
The Independent Review Chair is also delighted to announce the 2019 BPP Review Stakeholder Advisory Panel that will provide an initial review of the updated Principles and Guidance, including the proposed new governance structure. Prior to publication of the Principles, in the first half of 2019, the BPPG will provide intermediate quarterly updates and in Q2 2019 it will organise a structured roundtable process for gathering feedback on the proposed amendments from stakeholders including issuers, investors and regulators.
The 2019 BPP Review Stakeholder Advisory Panel is comprised as follows:
|Jakob Skafte||Senior Analyst, ESG||ATP|
|Mirza Baig||Global Head of Governance||Aviva Investors|
|Geof Stapledon||Vice President Governance||BHP Billiton|
|Michael Herskovich||Head of Corporate Governance||BNP Paribas Asset Management|
|Matt Orsagh||Director, Capital Markets Policy||CFA Institute|
|Ken Bertsch||Executive Director||Council of Institutional Investors|
|Rients Abma||Executive Director||Eumedion|
|Carine Smith Ihenacho||Chief Corporate Governance Officer||NBIM|
|Francesco Chiappetta||Consultant, Corporate Governance||Pirelli & C. S.p.A|
|Paul Clark||Head of Stewardship||UBS Asset Management|
|Lutgart Van den Berghe||Professor of Corporate Governance||Vlerick Business School|
The terms of reference of the BPP Review Stakeholder Advisory Panel require it to be composed of members with the mix of skills, backgrounds, knowledge, experience, geographic locations and diversity appropriate to oversee updates to the Principles in light of the transparency requirements for proxy advisors outlined in the amendments to SRD II. Members represent the following key stakeholder groups directly or through representative bodies – asset owners, asset managers and companies.
Given that the Principles and Guidance promote the integrity and efficiency of shareholder voting research services, which play an important role in investors exercising their stewardship rights and responsibilities, adequate investor representation on the BPP Review Stakeholder Advisory Panel is crucial. The appointed 2019 BPP Review Stakeholder Advisory Panel members recognise the following:
- The mission of the Principles is to promote greater understanding of corporate governance and ESG research, as well as of the support services provided to professional investors and other capital markets participants.
- Shareholder voting research services play an important role in supporting investor activities with respect to stewardship rights and responsibilities.
- The primary responsibility of shareholder voting research service providers is to their investor clients; the purpose of the Principles is to uphold and protect this responsibility.
In April 2017 the BPPG appointed independent Chairman, Chris Hodge, who served in the role until June 2018 and completed the public consultation phase. In October 2018 the BPPG Steering Group appointed Dr. Danielle A.M. Melis MBA, to succeed Chris Hodge as the new Chair of the BPPG. The main task of the new Chair is to oversee the BPPG Steering Group and coordinate and facilitate the finalization the Review process as outlined below.
The purpose of the BPP Review is to:
- Assess the implementation and content of the Principles;
- Ensure that the Principles are achieving the original objectives;
- Identify where there is scope to improve practice and transparency; and
- Ensure the Principles can be applied in all markets for which voting research and analysis is provided, and by all providers of such services.
The original objectives of BPPG in establishing the Principles was to:
- Promote a greater understanding of the role of shareholder voting research providers in the voting decisions made by institutional investors;
- Promote the integrity and efficiency of processes and controls related to the provision of these research services; and
- Foster robust conflicts of interest management.
The assessment of the Principles will involve consideration of:
- The structure and content of the Principles;
- The form and frequency of reporting against the Principles;
- The process and criteria for providers to become signatories; and
- The oversight arrangements for monitoring and reviewing the Principles.
The BPP Review will be informed by (but not limited to):
- The views of investors, companies and other stakeholders received through the Public Consultation by BPPG completed in December 2017;
- Experience of implementing the Principles since they were introduced in 2014;
- The December 2015 report on the development and implementation of the principles by the European Securities and Markets Authority;
- The revised EU Shareholder Rights Directive and regulatory developments in other markets since the Principles were introduced; and
- Investor Stewardship Codes