Asset managers are keeping UK pension funds in the dark on how they exercise their voting rights and engage with the companies they invest in, a study by Dalriada Trustees has found.
After approaching 43 asset managers, the researchers found that just one-third were able to provide details of how they had used their influence in voting as investors. Some 28% gave no information, while 40% said that there was nothing to report.
This is despite voting rights being crucial for pension trustees to meet their fiduciary duties, and becoming increasingly important when holding companies to account on environmental, social and governance (ESG) goals.
Pensions minister, Guy Opperman, commented: “It’s totally unacceptable that fund managers are unable or unwilling to respond to reasonable requests from pension funds for information on how their votes were cast.
“Pension fund trustees need this information to fulfil their statutory and fiduciary duties. Asset managers need to step up, use their votes and report efficiently. I will be closely monitoring progress.”
When it comes to engagement with investee companies, only 23% of asset managers were able to provide detailed information on engagement they undertook, while a further 19% gave partial information.
Some 42% of managers provided no information on engagement, while 16% said that there was nothing to report.
Pension trustees are required by law to create an annual implementation statement, which outlines how their policies on exercising rights, including voting rights, and engagement with their investments, have been undertaken.
David Fogarty, director at Dalriada Trustees, said: “As trustees, we need to be able to show members what action we are taking in terms of voting and engagement on the assets we govern on their behalf.
“Yet, we are in a position where we are receiving insufficient information from the asset management community. We are seeing managers marketing funds for their ESG credentials, but they are failing to provide clear evidence of the actions being taken. Clearly, this needs to change.”
Image credit: iStock
Author: Chris Seekings