Investors Code of Responsibility Sets ‘Universal Standard’
Institutional investors urged to adopt best practices to boost long-term returns for shareholders.
WEST SACRAMENTO, CA – The California State Teachers’ Retirement System today endorsed a new code of responsibility for institutional investors, becoming the first US-based fund to back the policy, which it called a “standard for good corporate governance.”
The code was created by the British-based Institutional Shareholders’ Committee, and identifies best practices for institutional investors that choose to engage with the companies in which they invest. It also aims to enhance the quality of the dialogue of institutional investors with companies to help improve long-term returns to shareholders.
“We believe there is a universal standard for good corporate governance,” said Anne Sheehan, CalSTRS director of corporate governance. “It includes transparency and disclosure of activities, and engaging the companies to help maximize their performance—a best practice that we’ve followed for years.”
The CalSTRS governance policies reflect the new code:
- Public disclosure of governance policies
- How to manage conflicts of interest
- Working collectively with other institutional investors
- Disclosure of proxy votes
CalSTRS Corporate Governance policies address leading issues such as proxy access, executive compensation, board diversity and sustainability. As a long-term owner and lender to corporations around the world, CalSTRS’ duty is to protect those assets through the pursuit of good governance and operational accountability.
The code calls on institutions to publicly state how they apply its principles and disclose what steps they will take to verify compliance. Institutional investors that do not wish to engage must declare that the code is not relevant to them and explain why.
The ISC is an investor community that includes the Association of British Insurers, the Association of Investment Companies, the Investment Management Association and the National Association of Pension Funds.
The California State Teachers’ Retirement System, with a portfolio valued at $127.5 billion, is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 833,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts, and pays benefits of more than $8 billion annually.