4 March 2025
Jen Sisson, ICGN CEO
Good morning everyone, welcome to the ICGN 30th Anniversary Conference Asia, here in wonderful Tokyo. We are thrilled to have you all with us.
I would like to start with a very special thanks to our hosts, the Tokyo Stock Exchange and to our premier partner KPMG. Without the support of our hosts, partners and all our generous sponsors, we would not be able to make events like this happen, so please join me in thanking them all.
Now more than ever, the importance of forums like ICGN is clear.
We gather at a crucial moment. The world around us is shifting, and the pressures on investors have intensified.
We are seeing fast moving and worrying developments: diminishing shareholder rights, reduced investor protections, and added obstacles to effective stewardship.
We see a very polarised, sometimes misleading, and far too often oversimplified narrative in political arenas and the media about corporate governance and stewardship issues.
Engagement and advocacy, by investors and companies is going to be critical.
In our 2024 to the ICGN Stewardship Principles, we added a new focus on the importance of policy engagement and advocacy. We did this because it’s a crucially important lever of change.
We need to be thoughtful and purposeful about who we are engaging with, what we are advocating for, and why.
How we can use public policy advocacy efforts to help us protect and enhance value as investors for beneficiaries and clients and as companies for your shareholders and stakeholders.
We all need to play our part in safeguarding capital market efficiency, integrity, and resilience.
Everyone in this room can be an agent of positive change.
You all have the ability to influence the future shape of governance and stewardship standards and practices. We need to stand up for what we believe in, raise our voices and be clear about why getting this right matters.
Thriving capital markets with strong shareholder rights have enormous societal benefits, they help to provide capital to business and to generate returns that allow people to create wealth and provide for their futures.
To do that well, we need governance and stewardship to work effectively. This is really about accountability and transparency, how the basic contract of trust, checks and balances works, between the principals (the shareholders) and their agents (corporate management).
This is true both at an individual company or asset level and at a market-wide and systemic level.
Fiduciary duty anchors directors and senior executives to act in the interests of shareholders and the company. Governance effectiveness directly impacts a company’s performance, its resilience, and its long-term viability. We focus on corporate governance issues because they are material. “G” is key.
How? Let’s take a few examples. Who is on the board, what is their strategy, how do they allocate capital, what is their oversight of management, how do they structure incentives, dividend policies, consider mergers & acquisitions, approach risk management and control, financial reporting and audit and overall company transparency – these are all governance matters which are critical parts of business success, driving long-term returns and creating growth and value.
For investors, stewardship is a fundamental aspect fiduciary duty. As ICGN, we define stewardship as the responsible allocation, management, and oversight of capital, to protect and enhance long-term value for beneficiaries and clients. This contributes to capital market efficiency, integrity and resilience, and to sustainable economic growth.
Stewardship matters, and it is important that we stand up for the rights and safeguards we need to allow us to do it properly. As the great Bob Monks once said, “capitalism without owners will surely fail”.
I have said it before, but it bears repeating, shareholders are the company’s owners, they don’t want to see companies fail, they are not seeking to stymie management – long-term sustainable value creation is everyone’s ultimate goal.
When we are talking about investing hard working people’s pensions and savings, we want to make sure that there are appropriate protections in place. Investors are not calling for the undue burden of regulation, but for protection of fundamental ownership rights.
In particular:
Shareholders should be able to actively and fairly participate in the AGMs of the companies they own and meetings should not be arranged in ways that make exercising rights harder.
Votes should matter, and be allotted equally, ideally, one share should equal one vote.
We should avoid adding regulations based on either misunderstanding, or wilfully misrepresenting, the role of proxy advice and research providers. Making the voting process more complex and interrupting the analysis and thinking won’t help anyone.
No one believes there is only one way to do good governance, but the fundamentals tend to hold. We want to see strong and effective boards running great companies. Investors don’t
want to have to vote against management, votes against for their own sake are not the goal, but the right to vote and hold boards accountable when they are not meeting expectations is critical.
So, we need to have a thoughtful, balanced and active approach to stewardship, and we need to consider issues carefully, in the context of companies, markets and changing best practices.
It is important though to remember that investors cannot make fully informed investment decisions without material disclosures.
Companies should report in a transparent and timely fashion to their shareholders. And they should do so on all material information, across the full range of possibly material risks, opportunities and dependencies.
Here in Japan, we are very pleased to see momentum on plans to bring the disclosure of the Yuho forward, ahead of AGMs, to allow that information flow and stewardship process to work more effectively.
We are also heartened by the momentum in many parts of the world towards adoption of the ISSB global baseline standards. This will help to provide consistent and comparable financially material information to investors to aide their investment decisions.
To the companies in the room, I ask you to continue to take steps forward, to listen to your shareholders and investors with openness and to continue improving reporting transparency. Because communication between investors and companies is not just a key investment tool it is also a source of information for management and boards.
This isn’t all just a one-way flow of information, companies also actively benefit from stewardship dialogue and any impediment to this feedback loop can introduce risks.
Regulations and rules that disrupt this exchange may lead to unintended consequences that impact long-term value creation and company success.
This should be a constructive process. We need to have open, honest dialogue and to find ways to work together as investors and companies to achieve the best outcomes.
So, let’s keep all of this in mind as we spend the next two days hearing from some of the world’s leading experts in the field.
We will talk about governance issues around the world, and also here in Japan. We will reflect on emerging best practices; on the progress we have made and the risks we can see in steps backwards.
We will hear about the argument for good governance and strong stewardship driving growth.
If governments and stock exchanges want to attract new listings and inward investment; we believe that strong standards are best the way to do this, building trust and confidence in their markets as great places to invest.
We will discuss the fantastic progress we have seen here in Japan towards more diverse boards, with increasing levels of independence and better focus on capital efficiency, but we won’t rest on our laurels, we will look to the future to encourage that progress to continue.
As always with ICGN, our discussions will be anchored in our 4 strategic priorities –
- Strong and effective boards
- Protecting shareholder rights
- Reliable Reporting
- Best practices in Investor stewardship
Key themes that speak to the critical issues of the moment.
One of the wonderful things about our organisation is the breadth of the network and the fabulous opportunity that we have as ICGN members to come together, to learn from each other, to build our networks and to work together to drive forwards towards stronger governance standards and practices.
This is a fabulous opportunity for some of that honest dialogue between investors and companies, we are delighted to be hosted by the Tokyo Stock Exchange and to have many TSE-listed companies and their perspectives here with us.
I would like to extend my grateful thanks, on behalf of all of us at ICGN and our members, to the Financial Services Agency Japan and the Ministry of Economy Trade and Industry for their endorsement of this event and to all of the sponsors who have helped make it possible. In the room with you over the course of this event, you will find more than 350 representatives from over 200 organisations, from 5 continents and 25 countries, almost half the people in the room are from outside of Japan. So please make the most of that, join us for our networking reception and dinner, kindly hosted by JSS, and use this opportunity to strengthen our fabulous global network even further.
Have a great conference everyone.
