The Investor Stewardship Group (ISG) is an investor-led effort that includes some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts. The members include more than 70 U.S. and international institutional investors with combined assets in excess of US$32 trillion in the U.S. equity markets. The ISG is being led by each member’s senior corporate governance practitioners. The ISG was formed as a sustained initiative to establish a framework of basic investment stewardship and corporate governance standards for U.S. institutional investor and boardroom conduct. The result is the framework for U.S. Stewardship and Governance comprising of a set of stewardship principles for institutional investors and corporate governance principles for U.S. listed companies. The corporate governance framework articulates six principles that the ISG believes are fundamental to good corporate governance at U.S. listed companies [1]. They reflect the common corporate governance beliefs that are embedded in each member’s proxy voting and engagement guidelines, and are designed to establish a foundational set of investor expectations about corporate governance practices in U.S. publicly-listed companies.
The ISG encourages shareholders’ elected representatives — company directors — to apply the corporate governance principles at the companies on whose boards they serve. The ISG will evaluate companies’ alignment with these principles, as well as any discussion/disclosure of alternative approaches that directors maintain are in a company’s best interests.
The stewardship framework seeks to articulate a set of fundamental stewardship responsibilities for institutional investors.
As with the corporate governance principles, investors should implement the stewardship principles in a manner they deem appropriate. As guidance, the rationales and expectations that underpin each principle have been articulated. The ISG encourages institutional investors to be transparent in their proxy voting and engagement guidelines and to align them with the stewardship principles. These principles should not restrict investors from choosing to adopt more explicit and/or stronger stewardship practices.
The framework for U.S. Stewardship and Governance is not intended to replace or supersede any existing federal or state law and regulation, or any listing rules that apply to a company or an institutional investor. The framework is also not intended to be static and will be evaluated and revised periodically, with the consensus of its members, as expectations of corporate governance and investment stewardship evolve.
We welcome and encourage other investors to sign up and support the framework for U.S. Stewardship and Governance.