Asset managers in UK failing to meet the Stewardship Code
A UK-based NGO promoting responsible investment by pension funds and other institutional investors has given a poor report card on some of the largest asset managers in the UK in relation to ‘walking the talk’ on stewardship.
ShareAction’s report reviewed compliance by asset managers with the responsible investment and transparency criteria set out in the UK Stewardship Code. It assessed 33 of the largest asset managers in the UK, responsible for investing £13.8 trillion of assets for pension savers, charities, universities and individuals. The report is the fourth survey of the industry’s performance on responsible investment and provides the only available independent benchmark on this topic.
The report found that, while all of the asset managers surveyed were signatories to the Stewardship Code, a number continued not to disclose how they vote on clients’ behalf at company AGMs or a conflicts of interest policy, despite such disclosures being key requirements of the Code.
According to the report, while approximately 83 per cent of the asset managers surveyed publicly disclose their voting records, and 64 per cent publicly disclose their conflicts of interest policy, the lack of 100 per cent commitment to the disclosure requirements of the Stewardship Code makes a mockery of it. ShareAction is particularly critical of the fact that signatories who do not comply with the disclosure obligations of the Stewardship Code nonetheless continue to benefit from the enhanced reputation of being seen to be a responsible ‘steward’ of funds that accrues to having signed up to it.
The report also reveals that:
- 100% of asset managers publicly state that they are committed to stewardship, as they are signatories to the UK Stewardship Code
- 42% of asset managers do not disclose policies on how they incorporate E and S considerations into the investment process
- 13% of survey respondents were able to disclose a robust strategy for managing the risks associated with stranded carbon assets
- only two-thirds (67%) of respondents were able to articulate clearly how they adapt their investment approach according to clients’ different investment horizons, suggesting that short-termism may still be a significant problem in UK’s financial markets.
At this time it is not known the Financial Reporting Council, which administers the Code, will take any action against those asset managers who do not comply with their disclosure requirements.