Response to the FRC consultation on the CG code
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PLSA response to the FRC consultation on the corporate governance code

The PLSA has responded to the Financial Reporting Council’s consultation on reforms to the corporate governance and stewardship codes.

UK pension funds represent approximately 60 per cent of the institutional investment money managed in the UK by members of the Investment Association. This represents about £2.2 trillion. The PLSA represents 1,300 pension schemes, responsible for the pension savings of around 20 million members. The culture, strategy and performance of the companies in which scheme members are invested determines their incomes in retirement. Therefore it is vital that their views are taken seriously when considering the governance regime overseeing those companies. Our response to the FRC’s consultation welcomes the measures to incorporate stakeholder perspective in corporate governance structures. We have made this argument for a number of years now through our programme of work on the governance of employment models, incorporating our discussion paper on the importance of the workforce to long-term company performance and the need for this to be reflected in corporate reporting; our stewardship toolkit for pension funds on engaging with companies over workforce-related issues; and our analysis of the current levels of workforce-related reporting across the FTSE 100.

The response also sets out various characteristics that the different vehicles for stakeholder representation should include, as well as recommending a number of measures to enhance the stewardship code, including clearer guidance for asset owners that invest in companies through an asset manager, rather than directly, and more provisions relating to the social and environmental impact of investments. We hope that the response will be a helpful contribution to the FRC’s work and will make a persuasive case on behalf of pension funds and the millions of savers for whom they work.