“Constructive dialogue” sought by UK asset owners with managers, including meetings and their involvement in an academic review.
Many of the “biggest asset managers at the highest level of stewardship”, are expected to take part in a new research project for the UK Asset Owner Roundtable on voting alignment between asset owners and their asset managers at European fossil fuel companies since the Paris Agreement.
The roundtable, chaired by Faith Ward, Chief Responsible Investment Officer at Brunel Pension Partnership, also plans to meet with managers on voting alignment over concerns that “short-term interests are trumping the long-term interests of pension funds”.
Last month, the roundtable commissioned an academic review on voting alignment at European fossil fuel companies that will be led by Andreas Hoepner, Professor of Operational Risk, Banking and Finance at the University College Dublin.
Hoepner told ESG Investor: “I think it is going to be super interesting because there’s loads of the biggest asset managers involved at the highest levels of stewardship. And we also have over 160,000 pages of stewardship reports which we will consult. So, it’s going to be pretty detailed.”
Hoepner is currently collecting voting track records from asset managers and said the cut-off point would be 10 August.
Disorderly climate transition risk
In a LinkedIn post, Ward has said UK asset owners are concerned that despite unequivocal warnings from the United Nations and the Intergovernmental Panel on Climate Change of the risks of delayed action on climate change, that short-term interests are trumping long-term interests of pension funds.
“Delayed action on climate increases the change of a disorderly climate transition and missing the goals of the Paris Agreement,” she said. “This in turn increases the risks to pension funds long-term interests and the ability of those funds to serve the interests of their members/beneficiaries.”
The research was commissioned in the wake of an AGM season which saw a number of climate-related resolutions fail to achieve majority shareholder support at leading oil and gas majors despite the backing of major UK asset owners.
In April, LGPS Central, Nest, Border to Coast, Universities Superannuation Scheme and Brunel Pension Partnership, which collectively oversee a combined £244 billion (US$304 billion) in assets, pre-declared they would be voting against reappointment of the chair of BP. Their action was in response to an announcement by the firm that it would row back on previously-announced net zero targets, which was made without consultation.
In June, the Church of England Pensions Board (CoEPB) and Church Commissioners said they would divest from oil and gas firms failing to align with climate goals, with energy majors, including BP, ExxonMobil and Shell, among others. All firms saw shareholder resolutions on climate disclosures fail to gain sufficient shareholder backing or the passing of weak climate transition plans. Members of the UK Asset Owner Roundtable include Scottish Widows and The Church of England Pension Board.