Fund managers pressured to show ESG engagement

Pensioner-with-caneFund managers competing for UK pension fund business increasingly need to prove engagement with invested companies over issues like the environment and cannot rely on just signing the UN Principles for Responsible Investment (UN PRI), research shows. The need to demonstrate shareholder engagement when business is pitched for is a "strong new development", the National Association of Pension Funds (NAPF) says in the release of its tenth annual Engagement Survey. The first survey, which the UK pension fund trade body conducted in 2004, showed that one-third of responding schemes considered stewardship activity when selecting investment managers or consultants. Ten years on, 80% of respondents say they now take stewardship activity into account in the selection process – and for over 50% this extends across all asset classes. The NAPF says screening for asset manager stewardship activity in the selection process is "not a mere tick-box exercise" for most funds, with 60% saying they are not content for managers to simply be a UN PRI signatory but will instead actively question prospective managers about their stewardship approach. Once selected, pension fund scrutiny of asset manager stewardship grows, the NAPF says. More time is now spent reviewing reporting; more attention is paid to the votes cast and, in turn, more questions are asked on a more regular basis. Will Pomroy, corporate governance policy lead at the NAPF, says: "A decade on from our first engagement survey there is now clear recognition that environmental, social and governance risks can have a material impact on pension fund investments and that these issues need to be managed through ongoing engagement with companies and the exercising of voting rights. "This recognition has rightly in turn been translated into the selection of asset managers; from one-third to 80% considering the stewardship approaches of asset managers in a decade is a real step change with significant implications." Responses to the survey were received from 50 pension funds with combined assets under management of £419 billion (€529 billion). ©2014 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.