Actions not Words: Alliance Trust
By Mark Hollander on Wednesday, 16 June 2021
How Alliance Trust demonstrated the true value of G in good governance
In the second in our ‘Actions not Words’ series we look at a prime example of how adopting ESG behaviours across the entire business can build reputation and customer loyalty. In particular, how Alliance Trust demonstrated the true value of G in good governance. While brands are understandably keen to show customers, prospects and shareholders a strong ESG ‘core’, corporate actions will always speak louder than media campaigns designed to communicate the same aim. While brands are understandably keen to show customers, prospects and shareholders a strong ESG ‘core’, corporate actions will always speak louder than media campaigns designed to communicate the same aim.
Last year, investment trust Alliance Trust pushed the boundaries of good corporate governance, addressing a significant industry issue: customers who’d become ‘separated’ from their assets (bank accounts, pensions, investments, life insurance and more). Research agency Gretel estimates this now affects almost 20 million clients with a total lost value exceeding £50 billion. Separation takes place easily: people move without telling providers their new address, die without their families knowing which products they have or simply forgetting they have them. While there is no mandatory obligation on a provider to actively track down and re-unite families with their assets, it’s not only putting the customer first, it’s also a practical demonstration of good corporate governance.
In a recent review of investment trust policy Alliance Trust identified ‘gone-away’ shareholders with combined interests of £1 million in shares and uncashed dividends worth over £200,000 dating back to 1998.
While it would have been easy to do nothing, Alliance Trust practised great governance and set out to re-unite shares and shareholders. Their commercial and corporate governance manager, Ian Anderson, started with the largest shareholdings and employed everything from publicly available resources to address files, death registrations, wills and good old Google.
Alliance Trust has re-united a significant number of investors with shares and dividends, many of whom were not even aware of their shareholdings, and in some cases this amounting to tens of thousands of pounds. And Alliance Trust has gone further from a governance point of view. While dividends more than 12 years old are statute-barred from claims for repayment, where the Company can locate the shareholder they will make a payment. Last year this included a Dundee charity who benefitted by just under £15,000.
And while good corporate governance leads to increased investment and improved shareholder approval, it’s still sufficiently uncommon to be seized upon by the media when they hear about it; in this case highly positive coverage in the Mail on Sunday online.
When our industry is often seen as the fall guy for consumer debt, repossessions and wider societal woes, actions such as Alliance Trust’s speak positive volumes for them, UK financial services and how we can all build back better following the pandemic.