August 21, 2018 / News

Fund firms feel weight of expectation on stewardship

By Joe McGrath, ESG Clarity

Fund managers are facing increasing scrutiny and pressure to exercise their voting rights at company annual general meetings, as a result of investors placing a greater emphasis on stewardship.

Fund firms feel weight of expectation on stewardship

Fund managers are facing increasing scrutiny and pressure to exercise their voting rights at company annual general meetings, as a result of investors placing a greater emphasis on stewardship.

That’s the conclusion of an annual report into investment behaviours by Swiss asset manager UBS. In the company’s 46th report looking at investor behaviours, entitled Your Investment Palette, it found that investors increasingly expect asset allocators to work with their peers to improve best practice and transparency at corporations.

“How investors exercise their voting rights is subject to greater scrutiny,” the report found. “Many investment institutions and asset owners now publish statements relating to their approach to responsible investment, active ownership and stewardship and it is increasingly seen as an integral part of fiduciary duty.”

The report, published on Tuesday, found that pension fund assets invested “sustainably” had risen from $14 trillion in 2012 to $22 trillion by 2016. The report’s contributors noted that attitudes towards sustainable investing are “changing fast,” noting that sustainable strategies had moved from niche investment funds to mainstream investments.

Michael Baldinger, head of Sustainable and Impact Investing at UBS Asset Management, said the fund firm believes that a global transition to a “low carbon economy” was vital.

He explained: “We are focused on supporting our clients in preparing for success in an increasingly carbon constrained world.

“We have made the strategic decision to bring sustainable investing into the mainstream of our offerings. This commitment is reflected by the expansion and transformation of our sustainability research and stewardship capabilities.”

UBS’s decision to bring sustainable investing into its mainstream business, follows other moves across the group to focus on sustainable and ESG investment themes.

In April, ESG Clarity’s sister title, Fund Selector Asia, reported that UBS Wealth Management’s sustainable cross-asset portfolio had gathered $100m (CHF$100m) in assets from Asia-Pacific clients, in its initial weeks of opening.