Institutional Shareholder Services Inc. has launched Governance Risk Reports, a new offering for global asset owners seeking to better monitor governance risk across participating investment managers‘ portfolios.
These reports will flag key issues in participating external managers’ proxy voting activities, providing asset owners needed insight for developing voting policies for their external managers, informing engagement activities with fund managers and companies, and, critically, to help mitigate risk in actively and passively managed funds. As such, Governance Risk Reports will give asset owners a clear picture of governance risk, including reputational risk, risk to long-term shareholder value creation, risk to the interests of a fund’s stakeholders, and risk to effective fulfillment of fiduciary obligations.
Fundamentally, Governance Risk Report users will be able to:
- Obtain an aggregate view of key governance matters across an asset owner’s investment managers who use ISS for proxy voting and participate in reporting;
- Benchmark votes cast with management recommendations (for both management and shareholder proposals) alongside the investment manager’s voting policy recommendations and ISS’ benchmark policy recommendations to determine potential gaps; and
- Uncover areas of risk across portfolios for companies with an ISS Governance QuickScore of 8 or higher.
“Asset owners will gain tremendous insight into governance risk across their portfolios with the introduction of Governance Risk Reports,” said Stephen Harvey, ISS’ Chief Revenue Officer. “Eight of the 25 largest global corporations have QuickScores of eight or higher, suggesting heightened governance risk for state and municipal pensions systems, sovereign wealth funds, local pension authorities and other funds with likely exposure to these companies. Now more than ever, asset owners need real-time intelligence to protect their beneficiaries‘ interests through effective governance monitoring. ”