The Asset Management Taskforce has released a set of 20 recommendations for investment managers and asset owners to expand their stewardship activities – including in increasing the focus on sustainability.
The group of investment managers, stakeholders and regulators led by the Treasury published a report, Investing with Purpose: placing stewardship at the heart of sustainable growth, supported by the Investment Association.
The recommendations are spread across three main pillars. The first is stewardship behaviours, in which recommendations include becoming signatories of the UK Stewardship Code; shareholders using requisitioned resolutions more proactively as an escalation tool and developing model resolutions to escalate a range of critical concerns with investee companies, including on climate change; setting out clear expectations for companies’ Covid-19 recovery plans; supporting ongoing efforts to enhance corporate reporting standards for sustainability; and a recommendation for the UK government to extend the mandating of the Task Force on Climate-related Financial Disclosures to all large UK incorporated companies.
The second pillar is stewardship for clients and savers in which a new steering group has been recommended, as well as a dedicated council of UK pensions schemes established. The report also calls for pension schemes to explain their stewardship policies.
The final pillar is an economy-wide approach to stewardship, in which recommendations include continued collaborative working, calls for funded public service schemes to embed stewardship in their investment processes, and for investment consultants to demonstrate how they support effective stewardship.
Catherine Howarth, chair of the Asset Management Taskforce’s stakeholder working group and CEO of ShareAction, said: “Wise and determined stewardship by institutional investors will help the UK to recover at pace from the current crisis. It will also strengthen the UK’s ability to handle future threats to our prosperity, such as climate change and biodiversity loss. We hope to see swift adoption of the 20 recommendations in this report, thereby cementing the UK’s existing strong reputation for stewardship of assets.”
The report includes examples of good practice and in particular cases where pushes towards greater sustainability has been achieved. For example, it noted the work of Aviva Investors, EOS at Federated Hermes (on behalf of its stewardship clients), Legal & General Investment Management, M&G Investments and Newton Investment Management as part of Climate Action 100+’s core engagement group, alongside other investors, to encourage BP to disclose a strategy consistent with the goals of the 2016 Paris Agreement.
Keith Skeoch, chair of the Asset Management Taskforce’s stewardship working group and chair of the Investment Association, said: “By acting as responsible stewards of capital, insisting that companies build wealth whilst protecting the public interest, whether by reducing carbon emissions, acting as decent employers, or operating with integrity towards consumers and suppliers, institutional investors can serve their own clients and beneficiaries more fully.”
In a foreword to the report, John Glen, economic secretary to the Treasury, said: “Stewardship, sustainability and responsible investment have long been at the top of my agenda for this group, and investment by the asset management industry will be important in building back not only better, but greener.”