New Stewardship Guidance for UK Pension Funds, Investment Managers

New recommendations have been introduced to help strengthen the relationship between UK pension funds and investment managers. The report, published by a steering group of managers, pension funds, investment consultants and lawyers established jointly by the Investment Association (IA) and Pensions and Lifetime Savings Association (PLSA), outlines how to implement effective stewardship between the two groups. Recommendations includes establishing an oversight framework between them asset owner and manager that outlines core sustainability KPIs that will be regularly reviewed, introducing a ‘governing charter’ setting out mutual expectations on the promotion of long-term sustainable value, and ensuring greater clarity and articulation of stewardship expectations during the manager appointment process. The report is in response to the Asset Management Taskforce tasking the IA and PLSA with providing more guidance and support in this area. Archie Struthers, Co-Chair of the steering group and an independent investment management expert, said: “Both asset owners and investment managers are facing unprecedented challenges in supporting the economy to transition to net zero. True collaboration, with a clear focus on sustainable value will be essential to navigate these challenges going forward. These recommendations help to focus on the practical steps which can be taken at each stage of the relationship from pre-appointment to ongoing oversight. Our goal with this report is to affect an intervention, as the end-to-end investment process can be much improved by all parties leaning in to work more effectively with each other on an ongoing basis, to the benefit of our collective beneficiaries.”

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