The PLSA has responded to the Business Energy and Industrial Strategy (BEIS) Select Committee consultation on corporate governance. The Association has a keen interest in ensuring the highest standards of corporate governance in the UK, and welcomes the Select Committee’s interest in this vital area.
The Committee outlined three areas of particular interest. Our position on these can be summarised as follows:
Directors’ duties – We are supportive of the current iteration of directors' duties outlined in the 2006 Companies Act, requiring directors to have regard for all stakeholders, including employees, customers and wider society, but believe that these are poorly understood, enforced and reported against. More needs to be done to raise awareness of directors’ long-term responsibilities. Regulators should monitor reporting by companies of how these responsibilities have been fulfilled.
Executive remuneration – Our members are concerned by rising levels of executive pay in comparison to the pay awarded to the wider workforce. We believe the justification for this increasing discrepancy is weak and we support measures to empower engaged shareholders and to require disclosure of intra-company pay ratios.
Boardroom diversity – We believe that more diversity is needed in boardrooms, in terms of gender, professional and social background and ethnicity. In a global economy, a broad range of experience and perspectives is helpful to understanding diverse markets and guarding against ‘group think’.
More generally the Association would like companies’ annual reports to include more information on how working practices, stakeholder relationships and corporate culture relate to the wider business strategy.
Luke Hildyard, Policy Lead for Stewardship and Corporate Governance, Pensions and Lifetime Savings Association, commented:
“The BEIS Select Committee’s interest in corporate governance is welcome from both a social fairness and business performance perspective. Companies with good corporate governance, an engaged workforce and a diverse breadth of experience and perspective at board level can deliver higher returns for our pension fund members.
“Ensuring that directors properly comply with their responsibilities to all stakeholders and enabling an effective challenge to overly-generous executive pay increases is an important part of this work.
“Our intention is that this submission will contribute to policy reform and we would welcome the opportunity to continue our work with the Select Committee to support the development of the right policies to encourage transparent, accountable governance structures.”
NOTES TO EDITORS:
PENSIONS AND LIFETIME SAVINGS ASSOCIATION
We’re the Pensions and Lifetime Savings Association, the national association with a ninety-year history of helping pension professionals run better pension schemes. With the support of over 1,300 pension schemes and over 400 supporting businesses, we are the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.
Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.
Lucy Grubb, Head of Media and PR, Pensions and Lifetime Savings Association
T: 020 7601 1726, M: 07713 073 023, E: [email protected]
Babak Mayamey, PR Manager, Pensions and Lifetime Savings Association
T: 020 7601 1718, M: 07825 171 446, E: [email protected]
Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
T: 020 7601 1748, M: 07901 007 713, E: [email protected]