Asset owners must challenge managers on RI – ShareAction
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A new report by campaigners ShareAction is calling on asset owners to hold managers to account on responsible investment governance and stewardship, after finding that many still “flinch from” actions like divesting following failed engagement.
The report analysing 77 of the largest asset managers says they made considerable progress on senior-level accountability and voting data disclosures. Three times as many asset managers are holding their board responsible for ESG-related concerns compared with just two years ago, and more than four-fifths now have voting policies in place that concern climate and social issues.
However, the campaign group claims that these policies are not being matched by real-world action, which it suggests could include commitments from asset managers to divest, reduce holdings or refuse to purchase new debt from problematic companies. Only about half of the asset managers surveyed had taken these steps.
Over half of managers with an escalation process did not include either consequences or triggers/time limits
“Our report finds that the world’s largest asset managers are stunting their own ambition on the matter of responsible investment by not committing to the most impactful governance and stewardship structures,” said Claudia Gray, who heads up financial sector research at ShareAction.
ShareAction says asset managers shy away from the type of measures that would attract the most attention, such as revealing the carbon footprint of portfolios so investors can see the impact the assets are having. Only 13% of managers reported disclosing the impacts of all their portfolios on people and the planet.
They also found that biodiversity is currently still on the margins of action for asset managers as the majority of them lack voting and engagement policies on this theme.
They also found that biodiversity is currently still on the margins of action for asset managers as the majority of them lack voting and engagement policies on this theme.
Things also look less than rosy for diversity and inclusion. Managers have “a long way to go” until they reach gender equality on their boards, ShareAction finds, though two-thirds of the managers reported having several measures in place to improve their internal diversity and inclusion.
ShareAction recommends asset owners should strengthen their due diligence for manager selection and demand regular reporting on stewardship around responsible investment. They should also be prepared to end mandates where manager do not live up to expectations, the group says.
It adds that consultants should challenge asset managers where stewardship activities are not in line with a manager's stated policy or substandard, and should encourage managers to improve RI disclosure and performance.
ShareAction recommends asset owners should strengthen their due diligence for manager selection and demand regular reporting on stewardship around responsible investment. They should also be prepared to end mandates where manager do not live up to expectations, the group says.
It adds that consultants should challenge asset managers where stewardship activities are not in line with a manager's stated policy or substandard, and should encourage managers to improve RI disclosure and performance.
How do pension funds hold asset managers to account about engagement policies?
