The UK Asset Owner Roundtable has revealed further details of a study on the potential for misalignment between asset managers and owners when it comes to stewardship on climate change.
The initiative has been launched on the back of a “challenging” AGM season, with a number of major oil and gas firms backtracking on their net zero commitment, as the roundtable’s current chair Faith Ward (pictured), chief responsible investment officer at Brunel Pension Partnership explained.
“We have exercised our vote this year to address our concerns but when we looked at some of the actions from other shareholders in those companies, there didn’t seem to be a widespread level of support. There seems to be a misalignment between the way asset managers were voting and the asset owner community” said Ward.
The roundtable, an alliance of UK asset owners, has commissioned Andreas Hoepner, professor of Operational Risk, Banking & Finance at University College Dublin to execute the research.
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The study will investigate investor stewardship at any oil and gas companies flagged by the Transition Pathway Initiative. Research will span from 2016, the introduction of the Paris Agreement, to 2023 and compare voting patterns of owners and managers, with asset owners being equally weighted. In addition, the research will also consider more than 100,000 pages of stewardship reports to factor in alignment between stewardship intentions and actual voting patterns, Hoepner explained.
Ward added that the study has so far had a very good take up, with many asset managers actively participating.
The Roundtable has also invited proxy voting services to participate. While Glass Lewis has accepted the contribution, ISS has declined the invitation for the time being.
Ward hinted that the research has drawn strong attention not just in the UK, but that asset owners across Europe have expressed interest in pursuing similar alignment surveys.
The initiative comes as the United Nations Framework Convention on Climate Change (UNFCC) warning earlier this month that the world’s progress on reaching the targets set in the Paris Agreement has been “woefully inadequate.”
“We are at a critical moment in terms of stewardship of the underlying assets” said Adam Matthews, chief responsible investment officer at the Church of England's Pension Fund, who highlighted the long term nature of the investment cycle for asset owners." This is about ensuring that the managers are stewarding the assets on our behalf in an effective way” he added.
While some asset owners, including Scottish Widows, another member of the UK Asset Owner Roundtable, have been instrumental in adopting split voting or voting choice services, they were also keen to stress that this should not abdicate asset managers from their responsibility to tackle climate change, emphasised Shipra Gupta, investment stewardship lead at Scottish Widows.
This sentiment was backed by Leanne Clements, head of Responsible Investment at The People’s Partnership, provider of The People’s Pension. “As long as these big passive fund managers remain on the shareholder register, they still remain a systemically important engagement focus for asset owners like us with regards to their voting behaviour and notably voting escalation” she stressed.
Results will be presented on the 12th of October, the Roundtable will subsequently convene a meeting with managers to discuss the findings and aim to draw out come potential steps to address the misalignment.
