Guy Opperman, the UK minister for pensions and financial inclusion, has chastised investment mangers for their lack of action regarding climate change. Opperman even suggested that pension plan trustees should give their investment managers the sack if they don’t support climate resolutions.
“Some asset managers won’t support climate resolutions, or vote through pay awards for poor performance, and won’t vote out managers who show conflicts of interest or lack of independence,” Opperman said. His remarks were in a speech at the Association of Member Nominated Trustees’ (AMNT) autumn conference in London last week. “If you use these people – well, then you as trustees are far from limited in what you can do. Put simply, you can fire them. You have a great deal of power.”
Opperman said he backed the AMNT’s campaign to make asset managers take more notice of pension funds’ stances on ESG issues. But he was “shocked” by a report it released earlier this year that found that half of the fund managers polled said they did not have a climate change-related voting policy or guidelines in their overall voting policy.
The AMNT has complained to the Financial Conduct Authority and Treasury Select Committee that it is impossible for pension plans to develop robust ESG policies and to take savers’ views into account. That’s because fund managers are not always prepared to listen, the AMNT said.
“Our market is afflicted with some asset managers – they are certainly not the small ones – who are struggling to have an impact,” said Opperman. “I have in mind asset managers who tell you how many people are in their stewardship team, and the unspecified long-term engagement they have carried out with firms – which on further examination has achieved no substantive change in policy from those firms for 20 years or more.”
He said that it is the trustees’ responsibility to keep their investment managers to task, adding that “you are responsible for your own destiny … while the government is doing our bit, it has to be asked: What are you doing?”
Opperman has written to the 40 largest defined benefit plans and the 10 largest defined contribution programs, to find out what their policies are concerning ESG investing. These programs are responsible for approximately 50% of the assets in their respective sectors. He said a majority of the of those pension plans have responded.
“To put it politely, some are better than others,” said Opperman. “I welcome recent [FCA] changes … but I don’t think we can wait for managers with weak policies to be found out or get their act together. I think we need trustees to be able to set their own voting policies and guidelines now.”
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