Stewardship steering group aims to improve understanding between asset owners and investment managers.
UK pension funds and investment managers have launched a new steering group to “better embed” stewardship within long-term investment processes to deliver sustainable value to savers and investors. The steering group, which held its inaugural meeting earlier this week, is a joint initiative between the Investment Association (IA) and the Pensions and Lifetime Savings Association (PLSA).
Co-chaired by PLSA chair Richard Butcher and Archie Struthers, Global Head of Investment Governance and Oversight at Standard Life Aberdeen, the group will focus on four key areas: proactive steps by investment managers to understand clients’ stewardship priorities; the role of investment managers’ disclosures in asset owners’ approaches to stewardship; the role of stewardship in manager selection; and the role of contractual and non-contractual arrangements when embedding a long-term focus to stewardship expectations.
The steering group will further respond to issues flagged by the Financial Conduct Authority (FCA) and deliver on the recommendations presented by the Asset Management Taskforce Stewardship Working Group.
Last year, the IA surveyed FTSE 100 firms and reported that shareholder pressure has proven an effective tool when encouraging leading UK companies to align executive pension contributions more closely with other employees. Due to shareholder pressure, 98% of the 93 surveyed FTSE 100 firms had aligned their contributions to new director pensions with those of other employees or had committed to doing so.
Prior to the announcement of the steering group, PLSA published its ‘A Changing Climate: How Pension Funds Can Invest for the Future’ report, which aims to help UK pension funds overcome barriers preventing them from adopting investment strategies to minimise climate change. Research conducted by the body outlined that two-thirds of senior executives of pension funds believe they should be aligned with ESG. PLSA has also flagged that there is not enough diversity and inclusion on pension trustee boards, something which active stewardship could also address.
This news follows the UK Pensions Minister Guy Opperman’s decision to launch the new Taskforce on Pension Scheme Voting Implementation – a body suggested by the Association of Member Nominated Trustees (AMNT) in its ‘Bringing Shareholder Voting into the 21st Century’ report.
“The relationship between asset managers and asset owners is vital if we are to achieve the objective of investing for good,” said Butcher.
“Investors like pension schemes should be active stewards. We have a responsibility to help our members achieve the best long-term returns – investing without engaging is handing over the power of our members’ voices to others,” said Helen Dean, CEO of Nest, one of the eight members of the new committee.