The Pensions and Lifetime Savings Association's (PLSA) 2018 corporate governance policy and voting guidelines have been published providing its members with examples of good stewardship practice and recommendations for key votes at the Annual General Meetings of their investee companies, on subjects such as executive pay, the re-election of directors and the approval of the annual report.

The PLSA produces its guidelines following consultation with its members. This year the PLSA has introduced a section on sustainability. This follows the publication last year of guidance for pension funds on the economic implications of climate change, highlighting research showing that failure to mitigate global temperature increases will have devastating environmental, social and economic consequences.

The report said that political and economic developments designed to combat climate change will affect the viability of business models across a wide range of sectors. The paper recommended that pension funds question their asset managers on how they are engaging with investee companies over the impact of climate change, including their use of their votes at company AGMs.

The PLSA's sustainability guidelines recommend that where shareholder attempts have failed to encourage companies in relevant sectors to provide a detailed risk assessment and response to the effect of climate change on their business, they should not support the re-election of the chair.

In last year's voting guidelines the PLSA introduced the recommendation that members vote against remuneration chairs when there are contentious pay issues and this seems to have been an effective method of making companies take note of institutional investors' views.

Manifest's voting guidelines follow corporate governance best practice including the PLSA's recommendations. As reported recently its 2018 AGM reports will provide more detail on board diversity and pay ratios while Say on Sustainability reports will reflect the recommendations of the Financial Stability Board’s Task Force on Climate-Related Disclosures and will identify which companies are referencing the United Nation’s Sustainable Development Goals.

Meanwhile the trade union, Unison has begun a campaign to help members of local government pension schemes push for changes in the investment of their funds so that they stop investing in fossil fuels and to go carbon-free. This follows the publication last year of a report examining the investment of the local government pension schemes in fossil fuels.

Unison has now produced a guide in collaboration with ShareAction for scheme members indicating how they can campaign for changes in their schemes.

Tomorrow's Company consults on how investor stewardship can be improved

Think-tank Tomorrow's Company has issued a discussion paper looking at ways that investor stewardship can be improved. The paper's ideas have been developed from the work of the stewardship Alliance of institutional investors, and of Tomorrow’s Company's on good governance.

The paper's executive summary stated: "There is a troubling disconnect between our system of wealth creation, and the society which it serves. The symptoms include public anger about corporate failure and excessive executive pay; the continuing impacts on living standards from the global financial crisis; low investment; poor returns for savers, pressure on pensions, and high levels of debt, especially for graduates.

Public trust in the whole system – including governments, universities and the media, not just business and investment – is low. Too often the attempt to tackle these problems deals only with individual symptoms. Effective solutions will only flow from a better diagnosis of the underlying problem, and combined actions by all involved."

While the report acknowledges that the overall quality of investor stewardship had improved since the introduction of the UK's stewardship code in 2010 it argues that a ‘critical mass’ of stewardship investors had not yet materialised. It calls for better leadership and regulation to embed investor stewardship. The government the report said needed to set out its overall policy for long-term wealth creation while stewardship needed to be central to the terms of reference of the Financial Conduct Authority.