First State boosts responsible investment prowess with first stewardship principles

First State Investments has unveiled a set of global stewardship principles that it says help put its clients’ interest first and boost its responsible investment credentials.

The fund house, which alongside its Australian sister company Colonial First State Global Asset Management manages £105.5 billion in assets, said the values will be adhered to across its business.

Mark Lazberger, First State Investments CEO, said the decision is recognition of the firm’s commitment to invest for productive purposes.

He added, “Our role as stewards is to ensure that we always act in our clients’ best interest and to protect and enhance their capital over the long-term. 

“These responsibilities may pose challenging topics with different shades of grey; however our global stewardship principles will ensure that we always use the best interests of our clients as our guide.”

A 2012 study by ShareAction (then FairPensions) into the transparency and responsibility of ethical funds recommended that First State signed up to the UK Stewardship Code. This is a voluntary set of principles that seek to improve engagement between asset managers and companies, in order to deal shareholders with better risk-adjusted returns in the long-term.

The fund house said its new global stewardship principles will be “completely compliant” with national and international stewardship codes.

Chris Hodge, director of corporate governance at the Financial Reporting Council which co-ordinates the UK Stewardship code, said, “We can’t comment specifically on First State’s move but we welcome all asset managers that make a commitment to stewardship.

“It drives better and more engagement between investors and boards, and increases the accountability of managers to their clients, the real owners of companies.”

The move is also said to have bolstered First State’s responsible investment credentials. Environmental, social and governance (ESG) factors are considered by all investment teams across the business. Each team has a dedicated responsible investment representative who sits on the firm’s ESG risk committee.

Will Oulton, First State’s global head of responsible investment, said the new stewardship principles chime well with the responsible investment approach that its 2012 annual report highlighted as “critical” in securing long-term success for the business.

“Stewardship is not something which is specific to any country or particular domestic group of assets. For us, it’s a core part of our approach to investment and the stewardship of our clients’ assets is a fundamental starting point”, Oulton added.

“Actively monitoring and engaging with company management and diligently executing our ownership obligations are central to our stewardship responsibilities. We have taken this commitment one step further by formally developing this global set of stewardship principles across our global investment business.”

First State’s announcement was welcomed by Mark Hoskin, a partner at London-based financial advisers Holden & Partners.

“In today’s world where most retail investors devolve their investment decision making to a third party investment manager, it is so important that the investment manager employed does not absolve itself of responsibility for the impact its decisions will have on society”, Hoskin said.

“This is why it is so important when companies like First State come out and make a positive statement about their global stewardship principles, which they are trying to implement uniformly across their business.

“In practice, of course, this presents many challenges, but in the post-financial crisis world, responsible capitalism is essential to rebuild trust between big finance and ordinary people.”

Further reading:

First State annual review highlights importance of responsible investment

Asset owners crucial in promoting ESG practices

Parliamentary event outlines long-term benefits of active ownership

Report criticises pension providers over responsible investment

Government must do more to make finance sustainable, say MPs