Big asset managers missing from revamped UK stewardship code

Financial services updates

Several of the world’s biggest asset managers, including Schroders, State Street Global Advisors and JPMorgan Asset Management, are absent from a list of signatories to the UK’s influential stewardship code following a revamp that imposed tougher reporting requirements on investors.

A third of asset managers and other groups that applied to be signatories of the overhauled code, a set of principles that dictates how investors hold companies to account, failed to pass the review process, the Financial Reporting Council, the UK’s auditing watchdog, said on Monday.

Monday’s list marks the first time since last year’s revamp of the world’s oldest stewardship code that names of signatories have been made public.

Some 189 asset managers, pension funds and other groups applied to be signatories, with 125 making the cut after a “rigorous review process”, the FRC said. The previous iteration of the code had about 300 signatories.

BlackRock, Abrdn and Legal and General Investment Management are among the big asset managers that appear on the list of signatories, alongside Vanguard, Amundi, Aviva Investors, M&G, UBS Asset Management, Fidelity International, Baillie Gifford, Janus Henderson and Jupiter.

Sir Jon Thompson, FRC chief executive, said the UK’s stewardship code was “recognised globally as a best-practice benchmark in investment stewardship”.

“We are proud of our robust approach to assessment and encourage those who have been unsuccessful to reflect on our feedback and apply again in future,” he added.

The concept of stewardship has become increasingly prominent in recent years, on the back of strong demand for sustainable investment products and a growing focus on the environmental and social impact of companies. As a result asset managers are come under pressure to show they are good stewards of investor capital, with many hiring specialists to lead these efforts.

The updated code imposes stricter requirements on signatories including asking them to provide evidence of their stewardship activities and show how they were integrating environmental, social and governance factors into investment decisions.

The revamped version of the code, which was first launched in 2010 and has been copied around the world, has been broadened into other asset classes other than public equities. To remain on the list, applicants will face a yearly reporting and review process.

Several big pension funds and asset owners also appear on the list of signatories, including Nest, the Church of England Pensions Board and the Universities Superannuation Scheme.

The FRC said the groups that did not make today’s list often failed to address all of the code’s principles or provided insufficient evidence to back up their approach, instead relying too heavily on policy statements.

The watchdog declined to name those who did not pass the review process. But those not included on the list of signatories included several bank-owned asset managers, including at Goldman Sachs, Credit Suisse, Northern Trust and BNP Paribas.

Columbia Threadneedle, T Rowe Price, Pimco and Allianz Global Investors were also absent.

Goldman Sachs Asset Management, Credit Suisse Asset Management and T Rowe Price declined to comment. BNP Paribas said it had not applied to be a signatory of the code. AllianzGI said it “wanted to get more visibility on the evolving reporting practice” and instead “will be applying next year”.

Northern Trust said it was “working diligently with the FRC to showcase our longstanding commitment to responsible stewardship”. Pimco said it was “committed to the principles of stewardship and engagement”. And Columbia Threadneedle said it was in the process of applying to be a signatory of the code in time for the FRC’s next deadline in October. 

Schroders said it was “frustrated not to be a signatory” and had been told by the FRC that this was due to “the format rather than the substance of our submission”. “We believe strongly in the power of stewardship and constructive engagement with business. We are confident we will be a signatory again soon,” added the company. 

State Street and JPMorgan did not respond to a request for comment.

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