EFRP Proposes EU Stewardship Code

02 September 2010 (PLANSPONSOREurope.com) The European Federation for Retirement Provision (EFRP) has proposed an EU Stewardship Code on corporate governance acceptable to all member states in its Green Paper on Corporate Governance in Financial Institutions and Remuneration Policies by the European Commission

The EFRP said it supported the Commission's aim to encourage shareholder engagement, but opposed any form of compulsion.

It argued that pension funds should be able to decide by themselves whether the benefits of engagement outweigh the costs of implementing such policies.

The EFRP said adherence to responsible investment principles may be a good way to contain behaviour and an enhancement of corporate governance in financial institutions may help prevent future banking crises.

However, the EFRP stressed that the potential achievements of active ownership policies should not be exaggerated, as the direct influence of shareholders in some areas was limited in many EU member states.

Chris Verhaegen, secretary general at the EFRP, said: "Sometimes, shareholders are blamed for not having done enough to prevent the financial crisis,

"However, in large parts of Europe, company boards operate quite independently from shareholders to represent the interests of all stakeholders.

"If it is felt shareholders have an important role in overseeing corporate governance and strategy, a logical consequence would be that shareholders' rights are enhanced. You cannot have it both ways."

Katherine Blackler
editors@plansponsoreurope.com