Asset owners and managers misaligned on oil and gas
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Asset owners and their managers are misaligned on oil and gas investments as shown by proxy voting, new research has found, with larger managers impacted more heavily by this.
A gap has developed between asset owners’ expectations and asset managers’ shareholder voting activity, bespoke research conducted this summer by Andreas Hoepner, professor of operational risk, banking & finance at University College Dublin, has found.
The research was introduced at a recent Asset Manager-Asset Owner Aligning Expectations roundtable that took place at the London Stock Exchange to review investor voting activities in the oil and gas sector.
The impact of the mismatch is minor at specialist asset managers but increases significantly at some of the larger and broader asset managers, according to the research, which also found that misalignment on US issuers is much bigger than on European issuers.
There is less alignment on shareholder than management resolutions, the research showed. While many specialist asset managers are highly correlated on shareholder resolutions, it found that some generalists deviate significantly, in some cases correlating negatively.
Faith Ward, chief responsible investment officer at Brunel Pension Partnership and chair of the UK Asset Owner Roundtable, opened the event highlighting a “perceived misalignment” between the long-term interests of asset owners and how investment managers are exercising proxy voting. Ward called for a focus on the oil and gas industries as a major source of greenhouse gas emissions.
The roundtable participants recognised the situation described in the research but expressed shock at the deep implications of the findings, according to Brunel Pension Partnership, which argued that the event enabled participants “to explore both the practical challenges that underlie misalignment on voting expectations, and potential solutions”.
Ward said: “Today has been a really positive starting point for an essential and ongoing dialogue. We have identified some practical steps to ensure we better inform and support fund managers in delivering against asset owners’ climate stewardship strategies.”
The participants said they are committed to improving communication and transparency, with asset owners emphasising their stewardship expectations and aims, and asset managers better articulating their stewardship approach, decisions and rationale for their votes.
Is alignment particularly poor for the oil and gas sector, and why?
