Annual Review June 2018 – June 2019

Influence • Connect • Inform Annual Review | June 2018 – June 2019 About ICGN Annual Review Annual Review | June 2018 – June 2019

Established in 1995 and led by This is achieved through three The ICGN Annual Review highlights investors responsible for assets under core objectives: work programme achievements from management in excess of $US 34 trillion, June 2018 to June 2019 and includes • Influencing public policy through ICGN is a leading authority on global a summary of ICGN’s financial position ICGN Principles: investor-led global standards of corporate governance to 31st December 2018. The ICGN standards for governance and and investor stewardship. We promote Annual Review will be presented stewardship. high standards of professional practice to Members at the Annual General among companies and investors alike in • Connecting investors and companies Meeting to be held at the New Otani their pursuit of long-term value creation at high quality events with unrivalled Hotel in Tokyo on 16th July 2019. contributing to sustainable economies opportunities for networking, worldwide. knowledge-sharing and collaboration. • Informing high standards of corporate governance and investor stewardship For more information visit practices through Professional www.icgn.org development, support and dialogue.

Contents

4 Supporting Members 5 Strategic Goals 6 Influence 12 Connect 14 Inform 17 Communicate 18 Grow 21 Sustain 23 Annual Financial Review Annual Review | June 2018 – June 2019 Supporting Strategic goals Annual Review | June 2018 – June 2019 Members

This year, we have equipped ICGN Members with Our Policy Committees responded to dozens of 1. Influence 4. Communicate tools to enhance their stewardship policies and regulatory consultations over the past 12 months, practices. Many Members now publicly endorse most notably in Japan and Europe. ICGN’s Promote ICGN Principles as investor- Raise ICGN visibility globally through ICGN’s Global Stewardship Principles which serve membership of the FSA’s Council of Experts which led global standards for corporate enhanced communication, media as the basis for the assessment criteria for the ICGN advises on Japan’s Stewardship and Corporate governance and investor stewardship, engagement and stakeholder relations. Global Stewardship Awards. Governance Codes is a good example of how ICGN thereby influencing public policy and Members can positively influence developments The purpose of the Awards is to help improve the professional practice. 5. Grow outside of their home-market. quality of stewardship disclosures and to recognise successful engagement outcomes or initiatives. We held successful meetings in Tokyo, , 2. Connect Build the strength and breadth of ICGN The best examples were included in a series of New York, London and Amsterdam and we are membership, recognising our heritage ‘stewardship disclosure templates’ on conflicts of extremely grateful to our hosts, partners, sponsors Organise high-quality global forums with of being investor-led, whilst inclusive to interest, voting polices, monitoring and engagement. and speakers for their support. ICGN Conferences unrivalled opportunities for networking, companies and stakeholders. provide an opportunity to take stock, share We have also reviewed the ICGN ESG Integration knowledge-sharing and collaboration. Today, ICGN Members experience and consider priorities for the year ahead Programme, launched in 2012 following an award 6. Sustain represent assets under and we look forward to future meetings planned for management in excess of from the European Commission. The programme 3. Inform Tokyo, Miami, Seoul, Toronto and Stockholm. Safeguard ICGN’s long-term sustainability US$34 trillion and are based has been delivered in over a dozen locations and now focuses modules more towards stewardship Today, ICGN Members represent assets under Encourage high standards of corporate through the appropriate management in over 45 countries. and corporate governance. management in excess of US$34 trillion and are governance and investor stewardship of risk, while investing in opportunities based in over 45 countries. Together, they are practice through professional Another milestone was the publication of the for growth under strong managerial an influential voice on corporate governance ‘Investor Agenda for Corporate ESG Reporting’, development, support and dialogue. leadership and effective board oversight. and investor stewardship practices, ultimately issued jointly with PRI and other investor contributing towards long-term value creation organisations and which has served as a key tool contributing to sustainable economies worldwide. for dialogue with corporate reporting bodies. This complements a raft of ICGN Viewpoints which help inform Members on subjects such as climate ICGN Membership Survey Results change, capital allocation, fixed income and human capital management.

Do you believe ICGN is Would you recommend Are you satisfied that effective in inspiring good ICGN membership the ICGN membership governance and investor to others? fee represents value stewardship? for money? 96% 98% 89% say yes say yes say yes

Mike McCauley Kerrie Waring *Results from ICGN Annual Membership Survey (February 2019), noting 10% response from overall membership. 4 Chair CEO 5 Annual Review | June 2018 – June 2019 Influence Annual Review | June 2018 – June 2019

Strategic Goal 1: Promote ICGN Principles as investor-led global standards for corporate governance and investor stewardship, thereby influencing public policy and professional practice.

Policy Priorities Priority 1: Long-term investment Priority 2: Making successful Priority 3: Building effective perspectives and sustainable value stewardship a reality, boards amidst the changing and Committee Outputs creation, promoted by the promoted by the ICGN boundaries of governance, ICGN Ethics & Systemic Risk Shareholder Responsibilities promoted by the ICGN ICGN is regarded as a Committee (ESRC), chaired by Committee (SHREC), Board Governance primary source of global Deborah Gilshan, formerly of co-chaired by Niels Lemmers, Committee (BGC), investor opinion as outlined Aberdeen Standard. VEB – Dutch Shareholders co-chaired by Gigi Dawe, in the ICGN Global Association and Alison Schneider, CPA Canada and Governance Principles and Alberta Investment Management. Carola van Lamoen, Robeco. ICGN Global Stewardship ESRC addresses systemic threats that might undermine the SHREC advocates high standards of investor governance stewardship Principles. ICGN Principles preservation and enhancement of long-term corporate value, responsibilities and promotes ICGN Global Stewardship Principles and BGC focuses on the quality of the board of directors as the primary and Guidance serve as impacting on capital market stability and economic growth. ICGN Model Mandate both of which have inspired changes to regulation oversight body responsible for driving long-term corporate value. In doing international benchmarks Core committee priorities include corporate purpose and in markets around the world. so boards are accountable to shareholders, while balancing the interests accountability, culture and integrity anti-corruption practices, of relevant stakeholders in generating wealth for society as a whole. The in the creation of national Key outputs include: codes and continue to regulatory and fiscal policies, technological disruption, committee’s priorities include board composition, remuneration, capital Commentary: allocation, independence and oversight of risk management. inform company governance environmental damage and social risks prompted by issues such as wealth inequality. • Financial Reporting Council, Proposed Revisions to the UK Corporate Key outputs include: practices and investor Governance Code, UK, Mar 2019 Key outputs include: Commentary: voting policies. • Financial Services Agency, Draft Guidelines for Investor and Company Guidance: Engagement, Japan, Mar 2019 • Tokyo Stock Exchange, Cash Equity Market Structure Consultation, • Reviewing and updating ICGN’s Anti-corruption Guidance, Japan, Jan 2019 • Financial Services Agency Statement to Council of Experts on which will involve a Member consultation and a revised Stewardship, Japan, Mar 2019 • Regierungskommission, Proposed Revisions to the German Corporate Guidance for Member approval at the 2020 ICGN Annual Governance Code, Jan 2019 General Meeting Guidance: • Financial Services Agency’s Council of Experts for the follow-up of • ICGN Guidance on Investor Fiduciary Duties Viewpoint: Japan’s Stewardship and Corporate Governance Codes: Focus on • Viewpoint on Systemic Risk, June 2019 SHREC Committee Members: Stephen Davis (Harvard Law School), Board Effectiveness and Capital Allocation, Japan, Nov 2019 Charles Demoulin (Deminor), Anne-Marie Jourdan (Fonds de Reserve), Viewpoint: ESRC Committee Members: Melsa Ararat (Sabanci Tetsuo Kitagawa (Aoyama Gakuin University), Cedric Laveri (ISS), University), Mirza Baig (Aviva Investors), Fabio Bianconi (Sodali), Charles Macek (Vicinity Centres), Rizal Mohamed Ali (KWAP), • Article in International Law and Financial Review on Corporate Lauren Compere (Boston Common Asset Management), Danielle Melis (Independent Board Member), Carol Nolan Drake Governance Issues Facing Directors and Investors, Mar 2019 Karin Halliday (AMP Capital Investor), Dana Hollinger (CalPERS), (Carlow Consulting LLC), Tracy Stewart (SBA Florida), Ryoko Ueda • Innovation: The Role of the Board and Investors, June 2019 John Jarrett (EY), Nokuthula Khumalo (Transnet Soc), (J-IRIS Research) Michael Viehs (Hermes Investment), Noah Wortman BGC Committee Members: Andrew Clearfield (Investment Initiatives), Dan Konigsburg (Deloitte), James Shein (Kellog School of (IMF Bentham). Management), Annachiara Svelto (UBI Banca). Pru Bennett (formerly Blackrock), Nicole Bradford (Cbus), Margaret Foran (Prudential Financial, Inc.), Linda Giuliano (AB Capital), Natacha Dimitrijevic (Formerly Hermes), Oscar Jasaui (Pacific Credit Rating), Karina Litvack (), Stilpon Nestor (Nestor Advisors), Debra Perry (Korn Ferry International), Joel Posters (Future Fund), David Silverman (Blue Harbour George Dallas Group), Geof Stapledon (BHP Billiton), Rebecca Vine (AVIVA), Daniel ICGN Policy Director Jarman (BMO Global AM). 6 7 Annual Review | June 2018 – June 2019 Promoting Investor Annual Review | June 2018 – June 2019 Stewardship

ICGN Annual Investor Stewardship Survey Results Priority 4: Protecting minority Priority 5: Seeking transparency through shareholder rights, promoted robust reporting, audit and metrics, promoted In January we published the results of ICGN’s first Annual Investor Stewardship Survey, which focused on by the ICGN Shareholder by the ICGN Disclosure and Transparency stewardship, resourcing, company engagement, voting and ESG integration. Over 40% of ICGN Members Rights Committee (SHRIG), Committee (DTC), chaired by responded representing around US$11 trillion AuM from 12 different countries. co-chaired by Bram Hendricks, James Andrus, CalPERS. KTMC and Eugenia Jackson, Stewardship is Allianz Global Investors. Over 80% of taken seriously at 28% of the highest level institutions now have some form of engagement is SHRIG seeks to protect minority shareholder rights to ensure that investors DTC advocates high quality corporate reporting through reliable auditing – nearly 90% of carried out on a stewardship teams exclusions policy, are properly equipped to discharge their fiduciary duties. This extends to standards to enable investors to exercise their ownership rights on an with controversial collective basis, report to either the the bulk of this the equitable treatment of shareholders and advocating against differential informed basis. CIO or CEO weapons excluded by most; followed informal share ownership structures, voting rights and cross border voting by tobacco and Key outputs include: infrastructure, company engagement and investor collaboration. thermal coal Commentary: Key outputs include: • IOSCO, Consultation Report on Good Practices for Audit Committees in Most respondents engage with over Commentary: Supporting Audit Quality, US, July 2018 Board quality 500 companies is the issue • Dutch Ministry of Justice, Draft Bill to Allow a Response Time of a year, with most discussed • European Commission, Fitness Check on the EU Framework for Public some reporting 250 Days in the Event of Hostile Takeovers, Feb 2019 in company Reporting, July 2018 significantly more engagements, than this. Most Viewpoint: • Public Company Accounting Oversight Board, Strategic Plan Comment followed closely activity (62%) by remuneration • Ministerio de Economia y Empresa Gobierno de Espana, Double Letter, Sept 2018 happens in the and then climate home market / change Voting Right, Spain, June 2019 • European Commission, Update on Non-binding Guidelines on region • Related Party Transactions and Minority Shareholder Rights, June 2018 Non-Financial Reporting, Mar 2019 • The Common Ownership Debate, Oct 2018 • Securities and Exchange Commission, Rulemaking on ESG Disclosure, US, Mar 2019 • Belgian Government, Loyalty Shares for Belgian Listed Companies, ICGN Global Stewardship Forum Oct 2018 • Corporate Reporting Dialogue, Better Alignment Consultation, Apr 2019 • New York Stock Exchange and Nasdaq, Dual Class Share Structures, The ICGN Global Stewardship Forum showcased approaches to stewardship practices around the world. Nov 2018 Viewpoint:

SHRIG Committee Members: Rients Abma (Eumedion), Claire Corney • The Investor Agenda on ESG, Reporting, co-written with the Principles (Computershare Ltd), Blair Cowper-Smith (Omers), Stephen Erlichman for Responsible Investment, Oct 2018 (Individual), Michael Herskovich (BNP Paribas), Gwen Le Berre (Charles • Quarterly Reporting, Sept 2018 Schwab), Arne Loow (AP4 Fjarde AP-Fonden), Massimo Menchini • Human Capital Management & Disclosure, Oct 2018 (Assogestioni), Paul Schneider (Ontario Teacher’s Pension Plan), David Smith (Aberdeen Standard), Peter Swabey (ICSA), Gerard Fehrenbach DTC Committee Members: Aaron Bernstein (Global Proxy Watch), (PGGM Investments), Nana Li (Asian Corporate Governance Association). Jean-Philippe Desmartin (Edmond de Rothschild), Lamia El Bounani, (Moroccan Institute of Directors), Cindy Fornelli, (Fomerly Center for Audit Quality (CAQ), Joyce Haboucha (formerly Rockefeller & Co.), Natasha Landell-Mills (Sarasin & Partners LLP), Daniel Malan (University of THE FORUM INCLUDED UPDATES WE EXAMINED CRITICAL FACTORS Stellenbosch Business School), Yoshiko Shibasaka (KPMG), Robert Walker FROM STANDARD SETTERS FOR SUCCESSFUL COLLECTIVE (Individual), Faryda Lindeman (NN Investment Partners). IN JAPAN, THE NETHERLANDS ENGAGEMENT WITH A PRESENTATION 8 AND THE UK BY THE INVESTOR FORUM 9 Annual Review | June 2018 – June 2019 Annual Review | June 2018 – June 2019

ICGN Global Stewardship Awards Stewardship In December 2018 the inaugural ICGN Global Stewardship Awards were launched Disclosure Templates to recognise individuals and organisations whose actions have helped to make ICGN Model ICGN Model ICGN Model ICGN Model Disclosure on Disclosure Disclosure on Disclosure on effective stewardship a reality and to encourage better quality disclosure. Following the launch of the ICGN Global Conflicts of on Voting Monitoring Engagement Stewardship Award we published a Interest series of ‘Model Disclosure Templates’. Stewardship Champion Award Stewardship Disclosure Awards: Asset Owner Using case-study examples from ICGN I am thrilled that our collaborative effort CalSTRS’ decade-long involvement in Members, the templates offer disclosure to ensure Exxon discloses how it manages ICGN has given us opportunities to maintain a guidance on policies for conflicts of interest, voting, monitoring and climate risk has been recognised in this way. leadership position in international governance. engagement. The changes we are seeing in the oil and gas Receiving this award is a testament to the global industry are testimony to the power of firmly footprint our team has planted in advancing exercised stewardship – now clearly established disclosure practices. A special thanks to Aeisha AllianceBernstein Investec Asset Management as a core investor responsibility. Mastagni and Brian Rice who did the work that Amundi Asset Management J.P. Morgan Asset Management Edward Mason, made this award possible. Church Commissioners for England Chris Ailman, CIO, CalSTRS AP1, Första AP-fonden Korea Investment Corporation AP2 Andra AP-fonden LACERA AP3 Tredje AP-fonden Legal & General Investment Management Asset Management One Co, Ltd Newton Investment Management Aviva Investors Nissay Asset Management AXA Investment Managers NN Investment Partners Baillie Gifford & Co Nordea Funds BlackRock Old Mutual Investment Group Endorsing ICGN Principles BNP Paribas Asset Management Ontario Teachers’ Pension Plan Boston Common Asset Management Pension Fund Association Photograph: Edward Mason and Photograph: Collected on behalf of CalSTRS The ICGN Global Stewardship Chris Hodge by Philip Larrieu, Associate Portfolio Manager, California Public Employees’ Retirement System Robeco Corporate Governance and Paul Lee Principles, provide an international framework for California State Teachers’ Retirement System Schroders Cartica Management, LLC Sompo Japan Nipponkoa Asset Management Stewardship Disclosure Award: Asset Manager investors to implement their stewardship responsibilities. COMGEST State Board of Administration of Florida (SBA) ICGN is a highly respected driver of corporate governance and Over 40 Members’ from Swedbank Robur Fonder AB stewardship best practices globally. BlackRock investment stewardship Deutsche Asset Management (DWS) 14 markets representing team is delighted and honoured to be recognised by ICGN for our Ethos Foundation Switzerland Triodos Investment Management $19tn AuM have signified their efforts in relation to global stewardship disclosures. We regard Fonds de Reserve Pour les Retraites UBS Asset Management disclosure as a key aspect of our investment stewardship activities on commitment to high standards Generali Investments Europe William Blair behalf of clients/asset owners. of investor stewardship Photograph: Collected on behalf Hermes Investment Management Amra Balic, Managing Director, of BlackRock by Amra Balic, by publicly endorsing the BlackRock EMEA, Investment Stewardship Managing Director, BlackRock Principles. HESTA EMEA, Investment Stewardship and 10 George Dallas 11 Annual Review | June 2018 – June 2019 Connect Annual Review | June 2018 – June 2019

Strategic Goal 2: Organise high-quality global forums with unrivalled opportunities for networking, knowledge-sharing and collaboration.

ICGN Annual ICGN New York ICGN Amsterdam Global Network of Conference, Milan Conference Conference Investor Associations Hosted by Assogestioni Hosted by the Office of Hosted by Eumedion In 2013, the ICGN established the in Premier Partnership New York City Comptroller 12 – 13 February 2019 GNIA as an international collaboration with Scott M. Stringer of investor-led organisations with 25 – 27 June 2018 22 October 2018 Maria Patrizia Grieco Robert J. Jackson Jr. Martin Spolc a common interest in promoting shareholder rights and responsibilities Featuring over 100 speakers from over a Our New York meeting attracted around Over 300 people attended our first event and effective standards of corporate dozen countries, the ICGN Annual Conference 200 people to hear Keynote Remarks from in 2019 from 27 countries with a focus on governance. Chaired by Mauro Cunha attracted around 500 delegates to discuss Robert J. Jackson Jr. of the U.S. Securities a new paradigm for corporate governance: of AMEC alongside ICGN’s CEO, emerging challenges in corporate governance. & Exchange Commission who was joined by a reassessment of the roles and responsibilities Kerrie Waring, GNIA meets monthly Keynotes included remarks from Jean Pierre Kathleen Hamm, Board Member of the Public of listed companies and institutional investors. to share knowledge on policy priorities. Mustier, CEO of UniCredit, Maria Patrizia Grieco, Company Accounting Oversight Board for the Martin Spolc, Head of Capital Markets Members are drawn from: Australia, Chairman of and Giuseppe Sala, Mayor of Afternoon Keynote. Delegates debated different Union of the European Commission, Brazil, Canada, Germany, Hong Kong, the City of Milano. Key subjects included: approaches to governance oversight from a presented the Keynote Address and Italy, Malaysia, Netherlands, UK and US and European perspective and conference conference topics included: • How to manage conflicts and dissenting the USA. topics included: voices in board decision-making; • How to enhance dialogue between • Implementing governance and stewardship • How investor duties relate to sustainability shareholders and stakeholders; in private companies; priorities; • Whether artificial intelligence would lead • How investors factor in board quality to more board effectiveness; and Global Stewardship Code Network • Impact of the EU Shareholder Rights Directive on voting practices; and as a prerequisite for good governance; and • How future AGMs might evolve: physical, To help organisations responsible for developing and implementing stewardship codes to exchange • Meaningful integration of the UN Sustainable • How technology is changing capital markets. virtual or hybrid? information, ICGN established the GSCN in June 2016. The Network meets annually at the ICGN’s Development Goals. Annual Conference. In addition, members participate in quarterly calls chaired by Chris Hodge which featured presentations this year from: The Financial Reporting Council (UK), the Financial Services Agency (Japan) and the Taiwan Stock Exchange.

Thank You to Our Sponsors

We are very grateful to the following sponsors for supporting ICGN events in Milan, Amsterdam, London, New York and Tokyo: BNP Paribas Asset North America South America Europe Africa Asia Management, Pomerantz, CAQ, Comgest, NN Investment Partners, MSCI, Glass Lewis, ISS, Sustainalytics, CGlytics, Deloitte, Broadridge, Nestle, Canada Brazil Denmark Kenya Hong Kong Japan Shareholder Services, EY, Sumitomo Mitsui Trust Asset Management, JICPA, Mitsubishi UFJ Trust and Banking (Asset Management), United States EFAMA South Africa Japan Italy Malaysia GO Investment Partners, Tokio Marine Asset Management, Asset Management One, J-Eurus IR, Nissay Asset Management, Nuveen – a TIAA Company, Netherlands Philippines KPMG, Fidelity Investments, Mazars, ICSA, BailleGifford, Morrow Sodali, Generali Investments, Eurizon Capital, Enel, LUISS Guido Caril, M & G Switzerland Singapore Investments, Lombardi Segni e Associati, Terna, Egon Zehnder, Amundi, Paul Hastings, Borsa Italiana, Leonardo Spa, Aberdeen Standard Investment, United Kingdom Taiwan Georgeson, UBI Banca, , Amber Capital, , Studio Legale e Tributario Valenti, Fineco Bank, , Prysmian, Eni, Farregamo, Group, Mondi Caffe, Canova, Gianni, Origoni, Grippo, Cappelli & Partners, Technogym, Instesa Sanpaolo. 12 13 Annual Review | June 2018 – June 2019 Inform Annual Review | June 2018 – June 2019

Strategic Goal 3: Encourage high standards of corporate governance and investor stewardship practice through professional development support and dialogue.

ICGN-ECGI ICGN Focus ICGN Governance Awards ICGN Lifetime Achievement Award Academic Day on Italy Day ICGN David Beatty, Conway Chair of Hosted by Hosted by Assogestioni Yearbook ICGN The inaugural ICGN the Clarkson Centre for Board Yearbook APG Group N.V. in Academic Partnership 2018 Corporate Governance Effectiveness, Rotman School 2018 11 February 2019 with LUISS Giudo Awards were presented Management, University of Toronto Carli University at the 2001 ICGN Annual was awarded the prestigious ‘ICGN First published in Marco Becht, Executive 28 June 2018 Emma Marcegaglia, Lifetime Achievement Award’ for Director, European Chairman, Eni & Luiss 2005, the ICGN Conference in Tokyo and, his significant contribution to the Corporate Governance Yearbook is an since then, it has been Institute (ECGI) advancement of corporate governance Influence | Connect | Inform given annually to individuals exclusive Member around the globe. benefit and draws who have demonstrated Following the 2019 Amsterdam Conference Following the Milan Annual Conference, over on insights from the world’s leading exceptional achievements Excellence in Corporate Governance ICGN and ECGI jointly produced an academic 350 people joined to debate a series of day, for which over 100 people registered. It was academic papers including keynotes from: commentators on corporate governance Two organisations were awarded the ‘Excellence in Corporate in corporate governance. a stimulating day of discussion between issues. It provides a memento of Governance Award’. The European Corporate Governance • Emma Marcegaglia, Chairman Eni practitioners and academic researchers with governance developments over the Institute (ECGI) was established in 2002 and is a source of & Luiss “Guido Carli” an interest in corporate governance, featuring years and serves as a point of reference critical research which has had a profound impact on how • Marco Ventoruzzo, Professor of Business Law, keynotes and academic papers from: on topical issues of the day. Articles in companies behave. Bocconi University, Milan • Martin Schmalz, Associate Professor of the 2018 edition included: AMEC was also founded in 2002 and serves as a critical voice • Giovanni Strampelli, Professor of Commercial Finance, Saïd Business School, University for domestic and foreign institutional investors in the Brazilian Law, Bocconi University, Milan • Market Integrity: A vision for the of Oxford Future, Nandini Sukumar, CEO, World capital markets. • Alessandro Zattoni, Professor of Strategy at • Moqi Xu, Assistant Professor of Finance, the Department of Business and Management Federation of Exchanges, UK London School of Economics of the LUISS Business School, Rome • Where Long-Term Sustainability and • Luc Renneboog, Professor of Corporate • Massimo Belcredi and Stefano Bozzi, Fiduciary Duty Meet, Niels Lemmers, Finance, Tilburg University Cattolica University Legal and Public Director • Dr. Tamas Barko, Researcher, Mannheim • Companies and Stakeholders: A new Business School, Mannheim University relationship? Prof. Vanessa Knapp • Elroy Dimson, Professor & Chairman, OBE, Specialist in Company Law and Centre for Endowment Asset Management, Corporate Governance University of Cambridge ICGN Webinars • Insights into Stewardship Disclosure Best Practices • Refocusing Governance on Value presented by Paul Lee Creation, David P Frick, Member of ICGN Webinars are exclusive • Integrating Fiduciary Duties in Stewardship Practices the Executive Board of Nestle S.A to Members and address key presented by Neils Lemmers of VEB governance developments. • How strategic reporting in the UK • Related Party Transactions and Corporate Governance Recent Webinars include: is evolving, Deepa Raval, Director of presented by Bram Hendricks of KTMC & Michael Narrative Reporting, FRC, UK Herskovich of BNP Paribas Asset Management • Cyber Security: Investors are being • Planning Board Succession presented by Stilpon Nestor left in the dark, Sarah Wilson, of Nestor Advisors Ltd. Founder Chief Executive, Minerva Analytics, UK 14 15 Annual Review | June 2018 – June 2019 Communicate Annual Review | June 2018 – June 2019

Strategic Goal 4: Raise ICGN visibility globally through enhanced communication, media engagement and stakeholder relations.

ICGN Stewardship and In 2018, ICGN began the process of updating the course with Media Engagement In the news… a focus on the growing profession of stewardship, in which Sustainability Course ESG factors remain a distinctive element and modules include: ICGN is proud to have a ICGN CEO, Kerrie Waring spoke to Investment Japan about how to enhance ICGN began its course in the • Overview of Stewardship in Practice global reach and our work corporate board quality “I do think we integration of environmental, • Managing Stewardship Responsibilities is regularly featured in articles around the globe: online, in should also recognize and applaud the social and governance (ESG) • Basic principles of Corporate Governance increased number of independent directors. factors in the investment • ESG and Investment Decision-making print and via social media. However, we all know that the most important thing is quality over quantity. process in 2011, initially • ESG Analysis funded by a grant from the Our efforts now really need to focus on the competence of Effective engagement, voting and communications European Commission. independent directors to really play a constructive role in challenging management strategically to help support the Since that time the course The purpose of the course is to equip investment professionals and others with an awareness of key elements to successful long-term sustainability of companies.” has been a regular, and stewardship, building a theoretical foundation supported with ICGN Policy Director, George Dallas, popular, feature of ICGN practical examples and cases. A pilot programme will be produced the article Capital allocation: conferences and has delivered in July 2019, hosted by the Tokyo Stock Exchange. A governance perspective for Ethical been delivered in over a Boardroom. “Capital allocation is where dozen jurisdictions, most corporate governance and corporate finance recently hosted by Kempen come together. For investors, a company’s Investment Management capital allocation links closely with questions of company purpose, strategy, business model, risk appetite in the Netherlands. and public disclosures – and, ultimately, to a company’s ability to generate sustainable returns.”

#Social Media

Investor Agenda for Corporate ESG Reporting June 2019 June 2019 4,266 2,095 In October 2018, ICGN and PRI, alongside other investor bodies, published a paper to provide a unified view on what investors expect from corporate ESG reporting. The paper outlines how investors use ESG information as part of their investment process and aims to clarify preferences June 2018 June 2018 around key elements of corporate ESG reporting. Key findings include: 3,935 1,415 • There is a clear business case for ESG reporting • There is no single set of metrics / framework that will satisfy all data users • Standardised ESG reporting at a basic level would be beneficial Twitter followers growing LinkedIn followers growing • Both investors and companies need to think more about systemic issues #ICGN19 #Corporategovernance • Standard setters should articulate complementarities or divergence @ICGNCorpGov 16 17 Annual Review | June 2018 – June 2019 Grow Annual Review | June 2018 – June 2019

Strategic Goal 5: Build the strength and breadth of ICGN membership, recognis ing our heritage of being investor-led, whilst inclusive to companies and stakeholders.

Members By Region

The ICGN Member logo is available for members to download on the website 27% Continental Members by Type 749 Europe Members 13% 11% Investor Association 21% 8% Company UK Individual/ 30% Other North America 9% Advisor 59% 42 17% Markets Asia & Australasia Top 5 ICGN Member Benefits

• Influencing public policy as part of a collective voice on matters of corporate governance and investor stewardship 4% • Network with peers across the globe, both in person 1% at events and via online networking tools Latin America Middle East & Africa • Brand alignment with ICGN and associated recognition & Carribean of a commitment to high standards • Professional development which raises personal US$ profiles within our global community of senior leaders • Risk-reducing expert guidance on industry issues and 34T access to exclusive information and leading opinions AuM

18 19 Annual Review | June 2018 – June 2019 Sustain Annual Review | June 2018 – June 2019

Strategic Goal 6: Safeguard ICGN’s long-term sustainability through the appropriate management of risk, while investing in opportunities for growth under strong managerial leadership and effective board oversight.

Board of Governors Committees 2018-19

2018-19 Awards Governance The ICGN Board directs the Recommends winners of the ICGN Awards. Develops and implements sound governance policies and practices relating to CEO appointment, affairs of the ICGN through Key responsibilities include: performance remuneration, succession planning, the oversight of the CEO who • Recommendation of Global Governance Award candidates board composition and evaluation. From 2019, this manages the ICGN Secretariat Melsa Ararat Ian Burger David Couldridge to ICGN Board Subanci University, Newton Investment Investec, committee will assume the responsibilities of the and work programme. Up to Turkey Management, UK South Africa • Ratification of Judging Panel decision on recipients of the ICGN Bylaws and Procedures Committee. twelve board members are Global Stewardship Award Robert Walker Key responsibilities include: elected by ICGN Members ICGN wishes to thank to the former Awards Committee Chair, Peter Butler, • Board evaluation and skills matrix review annually and comprise and former Committee Members being Melsa Ararat, Pru Bennett, Anne • CEO succession planning a majority of investors. Sheehan and Christian Strenger. • CEO remuneration and performance appraisal For the presentation of the 2019 Awards, a temporary Committee • Committee structure and composition review was established by the ICGN Board and members are Phil Armstrong, • ICGN Constitutional document oversight Anne-Marie Jourdan, Mike McCauley and Robert Walker. The Committee is chaired by Robert Walker and members Audit and Finance Dana Hollinger George Iguchi Anne-Marie are Mike McCauley, Anne Molyneux, Geof Stapledon and CalPERS, Nissay AM, Jourdan Overseas ICGN financial reporting, internal controls, Anne-Marie Jourdan. USA Japan FRR, risk management and audit. France Nomination Key responsibilities include: Recommends board governor candidates to • Financial Management Accounts ICGN Members for annual election/re-election. • Annual Operating Budget The committee members themselves are elected • Annual Risk Register Ian Burger individually at AGM. • Financial Reserves Policy The Committee is chaired by Carol Hansell and • Review of ICGN banking arrangements members are Frank Curtiss, Marcel Jeucken and Carol Hansell • Audit oversight and review Yoshiko Takayama. Claudia Kruse Mike McCauley Anne Molyneux The Committee is chaired by Ian Burger and members are Key responsibilities include: APG, Florida SBA, CS International, Netherlands USA (Chair) Switzerland (Vice Phil Armstrong, Dana Hollinger, Geof Stapledon and Paul Schneider. • Oversight of Board nomination and election process Chair) Bylaws and Procedures • Communication with ICGN Members, ICGN Board and others Advises on ICGN constitutional documents and • Solicit nominations to serve on the ICGN Board of Governors AGM procedures. This committee was dissolved in • Recommend candidates to ICGN members for approval at AGM May 2018 following the establishment of a new ICGN Governance Committee. ICGN wishes thank Simon Osborne, former Chair

of the ICGN Bylaws and Procedures Committee Simon Osborne and Committee members being David Couldridge, Paul Schneider Geof Stapledon Robert Walker OTTP, BHP Biliton, LVC Strategies, Judith Fox, Carol Hansell, Jon Lukomnik Canada UK Canada and Loren Wulfsohn. 20 21 Annual Review | June 2018 – June 2019 Annual Financial Annual Review | June 2018 – June 2019 Results (2018)

ICGN Secretariat Overview Revenue The ICGN is a non-profit body, registered in the UK The 2018 financial statements confirm as a company limited by a positive year-end result of £31,126 1% surplus (2017: £16,709). The overall net guarantee. The Secretariat is 44% effect on reserves is an increase from based in London, led by the Amara Akpan George Dallas Kerrie Waring Elle Thomas Paul Johnson £592,074 as at 31st December 2017 Assistant Company Policy Director Chief Executive Head of Membership Membership CEO who manages a team Secretary Communications Manager to £623,200. Conferences of nine staff who develop, & Events Annual turnover in 2018 was £1,662,897 Other coordinate and deliver the (2017: £1,281,706) with a gross surplus 55% ICGN work programme. of £924,202 (2017: £739,414) after cost of sales. Total administration costs, i.e. Secretariat running costs, amounted to £893,768 (2017: £722,738). Expenditure

Flo Doel Karel Krticka Milly Sheehan Jordan Wilks Amiirah Stakeholder Business Communications and Finance and Nobeebaccus 9% 2% 9% Engagement Manager Development Events Manager Administrative Events Logistic 73% Staff/ Manager Co-ordinator Co-ordinator 7% consultancy Marketing* Office/rent Professional Services ** Support Board/other

ICGN is grateful to the following people for their valuable support this year:

*Marketing includes website, publications and travel *Professional services include accounting, audit, legal and banking

Stephen Davis Chris Hodge Lesley Stephenson Loren Wulfsohn ESG Course Stewardship Awards Yearbook Editor Company Secretary Faculty Leader Advisor Advisor

22 23 Annual Review | June 2018 – June 2019 Annual Review | June 2018 – June 2019

Income & Expenditure 2017 2018 Notes to the results 1. Membership: ICGN membership subscriptions2017 11. Office: Includes telephone,2018 courier, stationery, accounted for 44% (2017:51%) of total revenue. postage, printing, software, IT support, 2018 (£GBP) Turnover Member recruitment was 14% (2017: 13%) equipment, surveys and subscriptions. 1. Membership 376,656 408,536 and attrition was 9% (2017: 10%). The total number of individual members as at 31st 12. Accounting: Buzzacott provides monthly 2. Conferences 868,128 1,227,428 December 2018 was 749 (2017: 655) and overall bookkeeping, quarterly management accounts, 3. Courses 26,077 14,900 membership income increased by 8% over the pay roll, VAT reporting, EC sales submissions, previous year. annual statutory accounts, and preparatory work 4. Yearbook 5,600 10,482 for audit. 5. Scholarships 2,728 1,446 2. Conferences: ICGN Conference profit 13. Audit: Audit services from Grant Thornton 6. Other 2,444 105 accounted for 55% (2017: 49%) of total revenue, the proportionate increase from the previous amount to £12,000 (2017: £9,841). Total turnover 1,281,706 1,662,897 year owing to the financial result from the ICGN 14. Legal/ tax: Relates to employment advice and Cost of sales (542,292) (738,695) Annual Conference hosted by Assogestioni in tax advice related to conferences. Total turnover minus cost 739,414 924,202 Milan which generated a profit of £452,326. Regional conferences delivered in Tokyo and 15. Bank Charges: Commission charges New York also generated budgeted surplus associated with membership and conference Administration results. payment administration. 7. Staff (481,432) (636,383) 3. Courses: The ICGN delivered one course in 16. Travel: Expenses related to ICGN representation 8. Consultancy (19,664) (16,242) 2018 held alongside the Annual Conference in at events and meetings. 9. Website (28,893) (28,989) Milan, hosted by Luiss University. 17. Marketing/Publications: Includes publication of 10. Rent (44,342) (45,153) 4. Yearbook: The ICGN allows for a restricted material and guidance. amount of advertorial space and generated 11. Office (35,038) (35,488) 18. Board/Committees: Includes costs of company £10,482. 12. Accounting (23,085) (29,485) secretarial and board evaluation services. 13. Audit (9,841) (12,000) 5. Scholarships: An amount of £1,442 relates to individual donations from ICGN members. 19. Other administration: Include depreciation and 14. Legal/tax (9,944) (24,483) sundry items. 15. Banking (14,706) (16,081) 6. Other: £105 received as other income from bank. 16. Travel (21,052) (16,857) 17. Marketing/publications (19,718) (16,698) 7. Staff: Human resource costs increased by 32% over previous year owing to (1) appointment of 18. Board/committees (13,909) (5,810) two new positions (Policy Advisor and Assistant 19. Other (1,160) (10,099) Company Secretary); (2) salary increases for all Total administration (722,783) (893,768) staff; and (3) awarding of full staff bonus, noting only limited bonus paid in 2017. Operating surplus 16,631 30,434 8. Consultancy: Relates to training, staff recruitment and costs of stewardship award Interest receivable 78 692 analysis. 9. Website: Relates to maintenance and minor Surplus before tax 16,709 31,126 development. Tax on profit - - 10. Rent: ICGN is a tenant of ICSA: The Governance Surplus after tax 16,709 31,126 Institute, and pays an annual rental which includes rates, service charge and insurance. Retained earnings at year start 575,365 592,074 Surplus for year 16,709 31,126 24 Retained earnings at year end 592,074 623,200 25 Annual Review | June 2018 – June 2019 Annual Review | June 2018 – June 2019

Risk oversight The ICGN Risk Register is reviewed annually by • Marketing and recruitment: efforts are being ICGN Members Companies BHP Billiton International Services Chartered Professional Ltd Accountants, Canada – CPA the ICGN Audit and Finance Committee and the undertaken to bolster membership income as A as of 31st December 2018 BlackRock Chevron Corporation ICGN Board. The Risk Register identifies known risk a proportion of overall gross surplus. A Sales Aberdeen Standard Investments Blue Harbour Group Chugai Pharmaceuticals factors and provides an assessment of potential Manager has been employed to focus on ACCA BMGI Church Commissioners & Pension mitigation of such risks. In 2018, the most prominent membership recruitment and new business Addenda Capital Inc BMOG Asset Management Board risks to the ICGN as an ongoing concern are: development as well as general marketing efforts. AFG BNP Paribas Asset Management Clarkson Centre for Board AFGE – Association Française BNY Mellon - Depositary Receipts Effectiveness, University of Toronto • Succession planning: The ICGN Secretariat is de Gouvernement d’Entreprise Board Consultants International CM-CIC led by the CEO who manages a team of nine AFM, Netherlands Authority for the BorderXingInfo Coca-Cola Company Financial Markets staff, including a part-time Policy Director. ICGN Boston Common Asset Colorado Public Employees’ is vulnerable to any sudden loss of senior staff Alberta Investment Management Management Retirement Association Company and a succession plan is being developed to deal BP International Limited Comgest AllianceBernstein L.P. with this which includes the employment of senior Brandes Investment Partners Computershare Ltd US Allianz Global Investors posts in the medium term. Brazilian Institute of Corporate Control de Gestion de Negocios, Amber Capital UK Governance S.C. • Increasingly dominant competition: The ICGN AMEC British Airways Pension Investment Cornerstone Capital Inc is at a disadvantage to other global membership AMP Capital Management Ltd Council of Institutional Investors organisations where there is a compelling Amundi Asset Management British Columbia Investment Crisci & Partners rationale for membership based on client Aneta McCoy Advisory Management CS International ANSA Broadridge Financial Solutions relationships. The ICGN must therefore continue Aoyama Gakuin University BT Pension Scheme Trustees Ltd D to lead and develop new initiatives to ensure the AP1, Första AP-fonden Bursa Malaysia Berhad D.F. King attractiveness of ICGN membership benefits. David Trenchard Consulting AP2, Andra AP-fonden C Limited AP3, Tredje AP-fonden Caisse des Dépôts et Deloitte Touche Tohmatsu, US AP4, Fjärde AP-fonden Consignations Deloitte, UK AP7, Sjunde AP-fonden Caisse des Dépôts et Placement DFDL (Thailand) Ltd APG Asset Management du Quebec DRRT Grant Thornton UK LLP (‘GT’) has served as ICGN’s Arabesque Asset Management Ltd California State University Auditor Review DRS Belgium auditor since 2010, noting there has been changes Asian Corporate Governance CalPERS, California Public Association Employees’ Retirement System Dutch Shareholders’ Association in audit partner on two occasions, most recently (VEB) Asset Management One Co, Ltd CalSTRS, California State in 2017. Taking into account the high-quality audit Teachers’ Retirement System DWS Assogestioni - Italian Investment performed by GT, the ICGN Board recommends the CamberView Partners, LLC Management Association E re-appointment of GT to audit the 2019 Financial Atlas Air Worldwide Canada Pension Plan Investment Board Edmond de Rothschild Asset Statements. ATP Management Canadian Coalition for Good While ICGN is not legally obliged to undertake Australian Council of Governance Eisai Co., Ltd. Superannuation Investors Elliott Management Corporation an audit, we recognise that it is good practice to Capital International, Inc. Australian Institute of Emisores Españoles change auditors on a periodic basis. As such, a Superannuation Trustees Cartica Capital Cbus Ernst & Young tender for audit services will be issued in 2019 Aviva Investors CCLA Investment Management Ernst & Young Shin Nihon LLC in preparation for the audit of the 2020 Financial Axa Investment Managers Center for Audit Quality Ernst & Young Switzerland Statements. B Centre for Corporate Governance, Ethos Foundation Baillie Gifford & Co University of Technology Sydney Eumedion Banco Santander Cevian Capital Eurizon Asset Management Barrick Gold Corporation CFA Institute European Corporate Governance Bernstein Litowitz Berger & Charles Schwab Investment Institute Grossmann LLP Management Evenlode Investments 26 Annual Review | June 2018 – June 2019 Annual Review | June 2018 – June 2019

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