The world’s largest asset managers are stepping up their engagement practices, with more disclosure and transparency, and better focus on stewardship, a new study has found.
Earlier this month ESG Clarity reported examples of best engagement practice, as identified by ShareAction’s Point of No Returns Part V – Leading Practice, review, which highlighted BNP Paribas Asset Management (BNP PAM), Robeco, NN Investment Partnership (NN IP), BMO Global Asset Management, AXA Investment Managers, L&G Investment Management, Aviva Investors, Schroders and M&G as showing best practice.
A new SquareWell Partners study, The Playing Field: A look at the world’s 50 largest asset managers, considers the engagement and voting practices of 50 assets managers with almost $60trn combined assets under management.
Voting and engagement
It found 47 of the top 50 asset managers have a disclosed bespoke voting policy, up from 41 in 2019, and 32 of the top 50 asset managers have included distinct environmental and social guidelines in their voting policy, up from 19 in 2019.
But only 17 of the top 50 asset managers have disclosed separate voting policies/guidelines for different markets, although this is more than double the amount in 2019.
Half of the asset managers now disclose within their voting policy their approach to contested situations (up from 18 in 2019), with contested board elections being the most common reason.
But although 41 disclose their engagement efforts, with half of those (20) naming companies they engaged with and what topics they covered, just 19 publicly voiced their discontent towards a specific company since January 2018, whether it be through commenting to a wider media publication to issuing a standalone press release.
“Although this is an increase from 13 in 2019, it appears to be disproportionate relative to the sizeable increase of investors disclosing the details of their engagements with companies when it comes to ESG topics,” the report said.
An example of a firm that has been vocal is Schroders: “While aligning with the board of a company operating within the security services sector and rejecting a rival hostile takeover bid that significantly undervalued the company and its prospects, Schroders publicly indicated they were, however, open to consider a price that would accurately reflect peer multiples, synergies, and other strategic benefits the acquirer would benefit from,” the report said.
When it comes to stewardship, asset managers are increasingly appointing dedicated teams and including them in voting decisions. The study found 45 have a dedicated ESG stewardship team (up from 37 in 2019), with 30 of those voting alongside their firms’ fund management teams.
Meanwhile, 46 of the top 50 asset managers are signatories to at least one stewardship code, with 36 of the selected asset managers being signatories of these two codes. Furthermore, 17 of the top 50 asset managers have also supported the International Corporate Governance Network’s Global Stewardship Principles.