Following a decision by the South African Institute of Directors to abandon a plan to launch a code aimed at encouraging engagement by institutional investors, the Public Investment Corporation (PIC) has pledged to pursue the matter, according to BusinessDay.

Next month will see the publication of the King III Report on Corporate Governance which will update the existing King II code on corporate governance. As previously noted on Manifest-i, a draft document was published in May. It is hoped that the new Code will prompt companies to aspire to best practice

However, some commentators have expressed concerns that it remains possible for directors to pay lip service to the new code and have noted that enforcement must come from shareholders. Jayne Mammat an associate director in climate change and sustainability services at Ernst & Young, is quoted as saying, “it is in shareholder interest to ensure the ethical, sustainable and transparent operation of their investments. However, while there are pockets of shareholder activism, it is lacking.”

Thus, the commitment by PIC is a welcome one given the dependence on the successful operation of a comply and explain based code on shareholder engagement and activism. PIC has pledged to approach other large institutional shareholders as well as the Financial Services Board and the JSE. It is understood that informal discussions have already been undertaken.

Among those supporting PIC's stance, David Couldridge of Element Investment Managers has commented that "every opportunity should be taken to ensure institutional shareholders are aware of their responsibilities to engage with companies to improve corporate governance".