Asset managers are failing to “walk the talk” on stewardship and responsible investment, according to responsible investment charity ShareAction, after a report revealed that just 42% of asset managers assessed disclose policies on how they incorporate environmental and social considerations into the investment process.
The report ranks the 33 largest asset managers in the UK, who are responsible for investing £13.8 trillion of assets, on transparency and responsible investment. All of the firms involved have committed to active oversight of the firms in their portfolios, having signed up to the UK Stewardship Code, and 31 have signed the Principles for Responsible Investment.
Despite 96% of the asset managers questioned stating they believe conduct stewardship affects returns, 17% are failing to disclose information on their voting and engagement activities, with no improvement being made to this figure over the last four years.
Additionally, just 42% disclose policies on how they incorporate environmental and social consideration into the investment process, with policies on governance continuing to dominates, and only 13% were able to disclose a robust strategy for managing the risk associated with stranded carbon assets.
Author of the report, Stefano Galdiolo said, “In our most comprehensive survey to date, we show that a hard core of major investment firms still refuses to disclose basic information about how they vote in clients’ behalf at company annual general meetings. Similarly, there are still some dinosaurs in the sector who consider it beneath them to disclose a conflicts of interest policy.
“We hope the regulators address this problem as a matter of urgency and that such firms will be embracing more fully and genuinely responsible investment practices as the failure to do so will no doubt result in significant commercial disadvantages to them for showing such scant regard for clients’ interests.”
The report scores and ranks each firm, with Threadneedle Asset Management, Avivia Investors and Jupiter Asset Managers making up the top three, and each scoring at least 120 points out of a possible 143.
The worst performing firms were named as Wellington Management, J O Hambro Capital Management and Santander Asset Management, scoring 12, 15 and 18 points respectively.
Catherine Howarth, chief executive of ShareAction, commented, “Trustees of pension schemes should pay close attention to these results, and encourage take up of the individual recommendations made to each firm in this survey.”
Photo: Images of Money via Flickr