Nearly a fifth of asset managers are failing to disclose voting records despite having publicly promised to do so, according to research by campaign group ShareAction.
The group’s fourth annual survey of 33 UK-based asset managers found that 83% published details of their shareholder voting records and engagement activities, but this figure was virtually unchanged since ShareAction’s first survey in 2010.
“Failure to embrace responsible investment will no doubt result in significant commercial disadvantages to asset managers for showing such scant regard for clients’ interests.” —Stefano Galdiolo, ShareActionAll 33 fund groups had signed the UK’s Stewardship Code for investors. The code is designed to improve investors’ engagement with the companies they own and make public their voting records. The UK regulator, the Financial Conduct Authority, requires all fund managers to disclose how they apply the Stewardship Code.
However, ShareAction’s survey claimed to have found huge discrepancies between the promises made when signing up to the code, and the standards kept by asset managers.
ShareAction reported that fewer than half of those groups surveyed disclosed policies about how they incorporate environmental and social considerations into their investment processes.
A third of asset managers do not disclose a conflicts of interest policy, despite this being one of the key requirements of the Stewardship Code. Report author Stefano Galdiolo said such firms were “dinosaurs” and called for regulatory action.
“We hope the regulators address this problem as a matter of urgency,” Galdiolo said, “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.”
ShareAction ranked all 33 groups according to their compliance with the Stewardship Code, with Threadneedle Asset Management coming out on top. Aviva Investors, Jupiter Asset Management, Hermes Investment Management, and Legal & General Investment Management made up the top five.
The bottom five groups—among the nine that did not respond to ShareAction’s survey, and so were only assessed on their publicly-available information—were BNY Mellon subsidiary Wellington Management, JO Hambro Capital Management, Santander, M&G, and UBS Global Asset Management.
Of those that did respond, Invesco Perpetual recorded the lowest score, ranking 24th overall.
“In general there is a wide variation in quality of information and policies disclosed,” ShareAction said, “and although the code operates on a ‘comply or explain’ basis, often no explanation is given in instances of non-compliance.”
On the positive side, the campaign group noted a significant increase in the quality of voting and engagement disclosures. The application of responsible investment policies to fixed income investments also improved, with 83% of managers saying they consider environmental, social, and governance factors when selecting fixed income assets.
The full survey is available on ShareAction’s website.
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