The Investor Stewardship Group, Inc. (ISG) is one of the world’s largest investor-led efforts to develop a structure for both corporate governance and investment stewardship for a specific market. Its membership includes some of the largest U.S.-based institutional investors and global asset managers, along with several of their international counterparts. The members include more than 70 U.S. and international institutional investors with combined assets in excess of US$32 trillion in the U.S. equity markets. The ISG is led by each member’s senior corporate governance practitioners.
The professional experience of our members’ over a number of years has shown that good corporate governance and responsible stewardship are fundamental to creating long-term value for U.S. companies and the broader U.S. economy. The ISG was formed to bring all types of investors together to enable them to speak with one voice on fundamental issues of corporate governance and investment stewardship. The result is a framework consisting of a set of stewardship principles for institutional investors and corporate governance principles for U.S. listed companies.
The Investor Stewardship Group, Inc., is a Delaware nonprofit, nonstock corporation. It is an IRS Section 501(c) (6) entity. The internal structure of the ISG organization is made up of the following:
All ISG members are invited to join the Governance and/or the Marketing & Communications Advisory Councils, although joining a council is entirely optional. It is an opportunity for members to become more involved in the ISG.
ISG has the following internal governance documents:
The ISG adopted Guardrail Principles to provide a guide for members as to what they can and cannot do and help them identify potential issues, and is a reminder to members of their existing duties and responsibilities.
The Framework is an innovation in the U.S. market. For the first time there is a framework which:
[1] The Corporate Governance principles do not apply to U.S.-registered investment companies and business development companies, because they are not operating companies and have unique corporate governance practices as provided by law.
The Framework became effective on January 1, 2018.
Beginning with the 2018 proxy season, ISG signatories have been encouraging U.S. listed companies to articulate how their governance structures and practices align with the ISG’s Corporate Governance Principles. If they are not aligned, companies have been encouraged to explain how their approach differs and the rationale for any difference. ISG signatories believe companies can best decide on how and where to disclose their alignment with the Principles, for example, through investor relations, boards of directors or corporate governance websites, or in other investor outreach/engagement materials. Examples of company alignment disclosures can be found on the ISG website page, “Corporate Issuers’ Alignment Disclosures.”
By signing onto or endorsing the Framework, institutional investors have adopted these practices with respect to proxy voting and engagement guidelines and practices. ISG encourages shareholders’ elected representatives — company directors — to apply the Corporate Governance Principles at the companies on whose boards they serve.
However, the Framework is not intended to be prescriptive or exhaustive and companies and investors should apply it in a manner they deem appropriate. In fact, many of our members have higher standards than those contained in the Framework. To assist in the understanding and implementation of these Principles, ISG has provided the rationale and expectations that underpin each Principle.
ISG encourages companies to disclose how their governance structures and practices align with the Corporate Governance Principles and where and why they may differ in approach. ISG believes companies can best decide on how and where to disclose their alignment with the Principles. Examples of company alignment disclosures can be found on the ISG website page, “Corporate Issuers’ Alignment Disclosures.”
The ISG Framework is designed to codify basic governance and stewardship norms for public companies and their institutional investors. The ISG does not anticipate frequent amendments to the Framework, however it believes it should be evaluated periodically and amended to the extent that commonly accepted governance and stewardship norms evolve over time. An amendment process that permits all members to participate in the evolution of the Framework is included in the Corporate Governance Guidelines under “Amendment of the Framework.”
International investors who already have a set of corporate governance and stewardship principles aligned with the Framework can become signatories. Investors who may not already have a set of corporate governance and stewardship principles can also sign the Framework and adopt its principles as their policy guidelines. These members are “Signatory” members.
International investors who are governed by home-country governance or stewardship principles, or who have signed corporate governance or stewardship codes in other jurisdictions that may be inconsistent with the Framework, can endorse the Framework to demonstrate their support for these US-specific corporate governance and stewardship principles. These members are “Endorser” members.
ISG invites all asset managers, asset owners and other institutional investors investing in the U.S. capital markets to join ISG in this historic effort by signing onto or endorsing the Framework. If your organization is interested in joining ISG and for more information, please send an email to info@isgframework.org
ISG encourages all companies to articulate and disclose how their governance structures and practices align with the Framework as well as whether and why they differ in approach. ISG believes companies can best decide on how and where to disclose their alignment with the Principles.
Examples of company alignment disclosures can be found on the ISG website page, “Corporate Issuers’ Alignment Disclosures.”
The ISG is a voluntary group but members are expected ensure that their policies and practices meet or exceed the principles contained in the Framework. Members should periodically review their governance and stewardship policies to ensure that they remain consistent with the Framework.
ISG has adopted Guardrail Principles. The Guardrails provide a guide for members as to what they can and cannot do and helps them identify potential issues, and is a reminder to members of their existing duties and responsibilities. Because of the importance of these Guardrails, adherence to the Guardrails is a condition to new and continued membership in the ISG.
ISG members are encouraged to mention that they are ISG members and use the ISG logo on their websites, in their stewardship reports and in their marketing materials for the purpose of indicating their membership in ISG and support for ISG’s existing Framework.
As a Signatory or Endorser of the ISG Framework, members have specifically agreed to the six corporate governance principles and six stewardship principles outlined above. Each investor member of ISG has adopted proxy voting and engagement practices that are in line with the Framework. However, investor members may have different positions with respect to any particular companies’ governance practices or other general matters of governance. Accordingly, no member is authorized to speak on behalf of any other member or the ISG membership generally.
Investor members of ISG who engage with U.S. listed companies do so on their own behalf and in accordance with their own engagement policies.
Members are not permitted to state or imply that such engagement is supported by other investors by virtue of their common membership in ISG. At the present time, it is not ISG’s intention to allow or facilitate collaborative engagement for its members.
List of the “ISG Signatories and Endorsers.”
Email your specific queries to info@isgframework.org and someone will be in contact with you.