Fund managers 'out of order' on lack of transparency in voting policies

A majority of fund managers are not taking into account “best practice” public voting policies on climate change, gender and ethnic diversity, research from the Association of Member Nominated Trustees (ANMT) has found.

Its report, AMNT review into fund managers published today, 30 May, found that over half of the 38 fund managers who disclosed their voting policy did not have a climate change policy, while 30 per cent made no reference to gender diversity on boards.

The association has placed a formal complaint to the Financial Conduct Authority (FCA) over its findings, along with recommendations for a minimum standard regarding voting policies, including public disclosure.

Commenting on the findings, Pensions Minister Guy Opperman said: “It’s utterly unacceptable that most pension fund managers don’t have published policies and practices to combat climate change, and public commitments to tackle excessive pay and promote gender and ethnic diversity are all too rare.

“Being vague or secretive with the trustees and savers they represent is out of order. These obstructive fund managers need to take action now as effective and responsible shareholders.”

In addition, AMNT recommended an “accessible” voting record be established, increased transparency and accountability, comprehensive stewardship reporting and provision for acceptance of client voting policies.

The group said the research was developed due to a “continued unwillingness” of fund managers to accept client-directed voting in pooled fund arrangements, particularly AMNT’s Red Line Voting policies developed at the end of 2015.

AMNT founding co-chair, Janice Turner, said: “More and more pension trustees are trying to develop stewardship policies including for their pooled fund investments, but this study shows the scale of the problem that they have when they attempt to assert their stewardship responsibilities over their investments in pooled funds.”

The policies are based on globally adopted principles such as the United Nations Global Compact, covering a range of environmental, social and governance issues.

“All but the largest pension schemes are facing an almost blanket refusal by fund managers to accept their voting policies in pooled funds. This means that the fund managers' own policies are the basis on which our shareholder votes are cast at corporate AGMs, Turner added.

“The conclusion of our study is that, as things stand, asset owners investing in pooled funds cannot set their own policy and cannot rely on fund managers to reflect it in their policies either. There is no 'market' in voting policies; we have no choice.”

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