Efforts to address a perceived misalignment between asset owners’ long-term interests and how investment managers are exercising proxy voting are underway, with a number of UK asset owners committing to improving their communication and transparency.

The UK Asset Owner Roundtable, which was convened earlier this year, recently held its first event to discuss concerns over this perceived misalignment, including representatives from major asset owners, asset managers, and multinational and industry bodies.

Speaking at the event, UK Asset Owner Roundtable chair and Brunel Pension Partnership chief responsible investment officer, Faith Ward, emphasised the need to focus on the oil and gas industries in particular, noting that these industries are the source of 80 per cent of greenhouse gas emissions.

She also shared research from University College Dublin (UCD) professor of operational risk, banking and finance, Andreas Hoepner, which confirmed that a gap had developed between asset owners’ expectations and asset managers’ voting activity.

While the impact of this mismatch was minor at specialist asset managers, the analysis showed that it increased significantly at some of the larger and broader asset managers.

It also found that misalignment on US issuers is much bigger than on European issuers, and is also much more pronounced on shareholder resolutions than on management resolutions.

Furthermore, whilst many specialist asset managers were highly correlated on shareholder resolutions, some generalists deviate significantly, in some cases correlating negatively.

In response to the research, all of the UK Asset Owner Roundtable members expressed their commitment to improve communication and transparency, with asset owners emphasising their stewardship expectations and aims, and asset managers better articulating their stewardship approach, decisions and rationale behind voting.

The group suggested that enthusiasm for further discussion and action was also "clear", with Ward highlighting the meeting as “a really positive starting point for an essential and ongoing dialogue”.

“We have identified some practical steps to ensure we better inform and support fund managers in delivering against asset owners’ climate stewardship strategies,” she stated.

Share Story: