A group of local council pension funds has launched a fresh attack on the London Stock Exchange (LSE) for what it perceives as a push to lower boardroom standards for listed firms.
The Local Authority Pension Fund Forum (LAPFF), representing 87 local authority schemes managing £350 billion in assets, expressed its concerns regarding the LSE's chief executive, Dame Julia Hoggett, and her recent reform proposals for listing rules.
These proposals included a requirement for companies to report on Environmental, Social, and Governance (ESG) metrics, which were ultimately scrapped earlier this year. Additionally, Dame Julia has voiced concerns that chief executives on the stock exchange are underpaid compared to their US counterparts, raising fears that governance rules on executive pay might be weakened.
Doug McMurdo, chairman of the LAPFF, criticized the push for reform, stating it lacks the necessary analysis and evidence to withstand market scrutiny. He emphasized that the cost of capital is determined by market investors, not legal or sell-side interests.
The LSE has faced ongoing criticism for a declining number of companies choosing to list in London, particularly following the British microchip company Arm's decision to list in the US earlier this year. The LAPFF's letter represents the third formal complaint regarding these governance issues, underscoring the ongoing debate over corporate governance standards in the UK.