Investment Governance Code for Institutional Investors (I Code)
Objectives of the Investment Governance Code
Objectives of the Investment Governance Code
During the past decade, global organisations, corporations, and civil society organisations have strengthened focus on measures to address and resolve social exclusion and environmental degradation, which significantly impact sustainable development, inclusive growth, and the collective well-being and prosperity of economies, societies, people and the planet. Institutional Investors play a key role in this regard. They have important investment management responsibilities to ensure delivery of sustainable long-term value to their investment owners and beneficiaries. These responsibilities include consideration of the risk profiles of Investee Companies. Institutional Investors should ensure to invest in companies that integrate Environment, Social and Governance (ESG) factors in their business practices. Furthermore, in the event that an Investee Company fails to implement ESG principles, the Institutional Investor should engage with the Investee Company to improve the company’s ESG performance. Leading international organisations and countries have promulgated principles for investment governance. Adoption of investment governance practices by Institutional Investors will not only promote sustainable growth and development, but also secure the best returns to their Asset Owners and beneficiaries, and provide durable benefits for Institutional Investors in the long term.The Securities and Exchange Commission (SEC) has joined this global trend by adopting the Investment Governance Code 2017 (I Code). The I Code contains investment governance principles and guidance reflecting current international standards and best practices for responsible and effective stewardship over investments by Institutional Investors. Implementation of the I Code by Institutional Investors will enhance confidence by domestic and global markets clients and trust that investment decisions and management are done in their best interest. Moreover, the I Code promotes and contributes to a good corporate governance ecosystem, stimulates responsible and sustainable practices by listed companies, and fosters growth and development of the Thai capital market and the wider economy.This I Code was developed following a peer review and consultation with relevant stakeholders, including the Office of Insurance Commission, Government Pension Fund, Social Security Office, the Federation of Thai Capital Market Organizations, the Association of Investment Management Companies, the Thai General Insurance Association, the Thai Life Assurance Association, the Association of Provident Fund, directors and management of asset management companies. The SEC Board approved the launch of this I Code to assist Institutional Investors in adopting best practices for responsible and sustainable investment in the best interest of their clients.
The I Code consists of seven principles (the “Principles”), stating that Institutional Investors should:
Principle 1: Adopt a Clear Written Investment Governance Policy.
Principle 2: Properly Prevent and Manage Conflicts of Interest and Prioritise Advancing the Best Interest of Clients.
Principle 3: Make Informed Investment Decisions and Engage in Active Ongoing Monitoring of Investee Companies.
Principle 4: Apply Enhanced Monitoring of and Engagement with the Investee Companies if Monitoring pursuant to Principle 3 is Considered Insufficient.
Principle 5: Have a Clear Policy on Exercising Voting Rights and Disclosure of Voting Results.
Principle 6: Act Collectively with Other Investors and Stakeholders as Appropriate
Principle 7: Regularly Disclose the Investment Governance Policy and Compliance with the Policy
Proxy Voting Guidelines
DECLARATION OF INTENT IN VIEW OF ESTABLISHING THAILAND'S PRIVATE SECTOR COLLECTIVE ACTION COALITION AGAINST CORRUPTION
Investment Governance Code the Practice Guide based on ICGN Global Stewardship Principles (in Thai)
Example of ESG Questions
The collaboration and collective effort and support by all relevant stakeholders are the key drivers for successful application of the I Code and integration of the Principles in business operations by Institutional Investors. To facilitate this, Thai Institutional Investors and their representative industry organisations jointly announced their commitment to the I Code principles by signing the DECLARATION OF MUTUAL COLLABORATION of Nine Organisations to Encourage the Implementation of the Investment Governance Code for Institutional Investors (I Code) on 23 February 2017. They declared the five commitments for cooperation as follows:Establish a collective framework to drive successful I Code implementation.Develop further guidance and training concepts to ensure uniform application of the I Code, and monitor and review the relevance and effectiveness of the I Code from time to time.Promote disclosure by Institutional Investors of I Code signatory status and stimulate implementation and compliance.Encourage selection of Asset Managers and Related Services Providers who are signatories to the I Code.Develop I Code compliance disclosures that accurately reflect the level of investment governance of an Institutional Investor and ensure easy accessibility to disclosures.Furthermore, a Steering Committee will facilitate and create an effective coordination platform for I Code implementation. The Steering Committee will consist of key representatives of Institutional Investors, their representative industry organisations, the SEC and other stakeholders, including representatives of the Office of Insurance Commission, Government Pension Fund, Social Security Office, the Federation of Thai Capital Market Organizations, the Association of Investment Management Companies, the Thai General Insurance Association, the Thai Life Assurance Association, and the Association of Provident Funds. The SEC’s Secretary-General is the chairman of the Steering Committee and the SEC’s Corporate Governance Department acts as its secretary.