SSGA Response to FRC Proposed Revisions to the UK Corporate Governance Code

As a signatory, we fully support the principles of good stewardship embodied in the UK Stewardship Code and endeavour to implement the spirit of the Code across all jurisdictions in which we invest. SSGA’s approach towards proxy voting and issuer engagement specifically is premised on the belief that companies that adopt robust and progressive governance and sustainability practices should be better positioned to generate long-term value and manage risk. As near perpetual holders of the constituents of the world’s primary indices, we believe that the informed exercise of voting rights coupled with targeted and  value-driven engagement is an effective mechanism of creating value for our clients. In 2017, we engaged with 55 UK companies, representing over GBP 20bn* of AUM, on various environmental, social and governance (ESG) issues including board effectiveness and executive compensation. Since 2013, SSGA has had approximately 2900 engagements on ESG issues with over 2500 companies in our global portfolio.

We support many of the FRC’s proposed revisions to the UK Governance Code such as placing greater emphasis on corporate culture and diversity as well as the need for companies to engage with all stakeholders, including the wider workforce. Furthermore, the proposed more concise format of the Code will, in our view, allow boards to become more flexible and realistic in their reporting on and compliance with the Code.

Although this consultation deals with a number of important corporate governance matters, we have enclosed detailed comments focused on specific issues such as the Code’s interaction with the UN Sustainable Development Goals, board independence and tenure as well as gender diversity. Our views are informed by our experience as an institutional investor that engages with a large number of companies globally. Should you wish to discuss this submission further, please do not hesitate to contact me.