A government taskforce led by HM Treasury has outlined a series of far-reaching recommendations designed to put stewardship at the heart of the UK’s commitment to ‘build back better’ post-coronavirus.
Twenty proposals across three themes are designed to help investment managers and asset owners expand their stewardship activity across different asset classes, including bonds, and will create a new Council of UK Pensions Schemes to support higher standards of pension stewardship.
The report, ‘Investing with Purpose: placing stewardship at the heart of sustainable growth‘, was produced by the Asset Management Taskforce – a group of the UK’s leading investment managers, stakeholders, and regulators led by HM Treasury. The Taskforce was supported by an industry-wide stakeholder working group chaired by Catherine Howarth of ShareAction and representatives from NEST, Minerva Analytics, London Business School, Willis Towers Watson, Chapter Zero, the Impact Investing Institute and HSBC Pension Trustees.
Commenting in the introduction of the 61 page report, City Minister, John Glen said that he hoped the recommendations would “encourage more effective stewardship right across the investment chain and help the asset management sector continue to support sustainable activity as we build back better and greener.”
The reports proposal focus on action across three pillars:
- Strengthening stewardship behaviour
- Embedding better stewardship for clients and savers
- Creating an economy wide-approach to stewardship
The underlying recommendations connect investment decisions more closely with climate change and sustainability, as well as strengthening the relationship between investors and their asset managers by:
- Expanding stewardship beyond the traditional focus on equities, so that investment managers can take a more active role as bondholders. Given that just over 30% of assets under management are placed in bonds, the investment industry will ramp-up its work with companies and further develop stewardship practices in this asset class.
- Strengthening escalation of stewardship by providing guidance to investment managers on bringing forward their own resolutions when companies are not responding to their concerns, and asking Government to review the rules which govern shareholders’ ability to bring their own resolutions.
- Embedding better stewardship in pension assets, which represent 40% of the assets under management in the UK, by seeking Government support for the establishment of a Council of UK Pension Schemes to promote and facilitate high standards of pension stewardship. UK pension schemes should also be required to explain how their stewardship policies and activities are in the best interests of scheme members.
- Improving companies’ reporting and disclosure to ensure consistency and comparability. This includes supporting the Government’s recent announcement to change company law to require all large UK incorporated companies (public and private) to report in line with the Taskforce on Climate-related Financial Disclosures (TCFD).
- Widening the adoption of the new UK Stewardship Code beyond investment managers which are expected to be signatories, to all service providers involved in the investment process so that all participants follow the same high standards with respect to stewardship.
Catherine Howarth, Chair of the Asset Management Taskforce’s Stakeholder Working Group and Chief Executive of ShareAction, welcomed the report’s publication: “We hope to see swift adoption of the 20 recommendations in this report, thereby cementing the UK’s existing strong reputation for stewardship of assets.”
For more information about how Minerva can help investors meet the stewardship challenge, say firstname.lastname@example.orgLast Updated: 24 November 2020