APT·INVESTMENT · Module 3: Investment for DB and DC Schemes·UnitINVESTMENT · Unit 04Access: Premium
Unit 3.4: Responsible Investment and Investment Governance
Unit 3.4 covers responsible investment and the governance of investment decision-making. It looks at socially responsible investment and corporate governance, the trustees’ responsibility as owners of the assets they hold and the stewardship and voting that goes with it, and the Myners principles for the governance of the investment decision-making process. Policies on financially material considerations, including environmental, social and governance factors, also have to appear in the Statement of Investment Principles covered in Unit 3.5, so the two units sit naturally together.
What’s in it.
3 topics- Topic 01
Socially Responsible Investment and Corporate Governance
45 questions - Topic 02
The Importance of Responsible Ownership of Assets
36 questions - Topic 03
The Myners Principles for the Governance of the Investment Decision-Making Process
27 questions
Sample questions
3 of manyA few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.
A trustee board is challenged by a member who claims the trustees have broken the law by not fully implementing the 'performance assessment' Myners principle. Applying the correct legal status of the framework, how should this claim be assessed?
- The claim is misconceived only because members are never entitled to raise governance concerns with trustees
- The claim is misconceived only because the member lacks standing to raise it, not because of the principles' legal status
- The claim is misconceived, since the Myners principles are voluntary and a shortfall is not a breach of statutory lawCorrect answer
- The claim is misconceived only because the 'performance assessment' principle in particular is not one of the current six principles
ExplanationBecause the Myners principles are voluntary best practice rather than statutory law, a shortfall against one of the six principles is not, in itself, a breach of statutory duty, even though it may reflect a governance weakness worth addressing. Key takeaway: a Myners shortfall is a governance quality issue, not a legal breach, given the framework's non-statutory status.
What is the first limb of the two-limb test governing when trustees may take non-financial factors into account?
- Trustees have decided, based on their own judgement alone, that members are likely to share the concern
- Trustees have good reason to think scheme members share the concernCorrect answer
- Trustees have published the concern in the scheme's annual report
- Trustees have achieved unanimous agreement among the trustee board
ExplanationThe first limb requires trustees to have good reason to think scheme members would share the concern in question, based on evidence rather than assumption. The second limb, addressed separately, requires no risk of significant financial detriment. Key takeaway: the first limb is about evidenced member views, not board consensus or third-party approval.
Which individual led the 2001 review of institutional investment that gave rise to the Myners principles?
- Paul MynersCorrect answer
- Steve Webb
- John Cridland
- Nicholas Ridley
ExplanationThe 2001 HM Treasury-commissioned review of institutional investment was led by Paul Myners, whose name is now attached to the resulting principles of good practice. Key takeaway: Paul Myners led the review from which the principles take their name.