British fund manager Hermes Investment Management on Monday called for improvements to the corporate governance code for private infrastructure assets, to ensure better outcomes for investors and other stakeholders.
Among the suggestions made by Hermes, which manages 28.6 billion pounds across a range of assets, were for periodic board ‘effectiveness reviews’, as well as an independent chairman and a minimum number of independent directors.
Hermes also suggested a range of solutions aimed at ensuring the long-term interests of all stakeholders are protected, including the creation of a stakeholder committee.
Pay should also be more closely aligned to ‘non-financial’ issues such as health and safety, it said, adding it backed better transparency and disclosure of such information to help boost accountability and best-practice.
“Few asset classes are as necessary, or significant, to the daily lives of individuals as infrastructure,” said Peter Hofbauer, head of infrastructure, Hermes Investment Management.
However as more of the assets are transferred from the public to the private sector, some of the principles of the corporate governance code for listed companies may not be appropriate or accepted in a private market environment.
“The result, therefore, may not always be a consistent, or optimal, outcome for investors, employees and other stakeholders,” Hofbauer said.