Some asset managers used by the charity sector could have a tendency to shy away from voting against company management, based on recent voting records analysed by corporate governance experts today.
Popular charity fund managers including Janus Henderson and Jupiter supported management 50% or more of the time on certain high-profile resolutions this AGM season, according to research from ShareAction.
This is in contrast to asset managers who tend to be more more ‘rebellious’, managers including Aviva, AQR, CCLA, and Liontrust. They all voted against management in over 60% of the resolutions examined and where data were available at the time of writing the report.
The report was produced for the Charities Responsible Investment Network, a group of charitable foundations managing £6 billion which seek to connect their charitable aims with their investment decisions. The report will help them, and other charity investors, to get ‘under the bonnet’ of the voting practices of their asset manager.
It looks at 20 controversial corporate governance resolutions on remuneration, board structure, and auditors, voted on by 19 fund managers with a strong environmental, social, and governance (ESG) mandate from charitable clients.
The responsible investment charity also finds opposition to individual board members has grown 13% from last year. Controversial votes against auditors are still extremely uncommon with only seven in 2018 (down from eight last year). Remuneration rebellions also saw a fallow year.
Lily Tomson, who manages ShareAction’s network of charity investors, said: “When it comes to stewarding charitable endowments – or even voting shares in general – too many asset managers have a habit of siding with company management. Voting to keep a company’s governance in check is an essential prerequisite to financial outcomes in the long term, but only an exemplary few are exercising this right. Members of the Charities Responsible Investment Network will use these findings to take their asset managers to task and push for greater transparency and accountability by the UK investment industry. We encourage other asset owners to do the same.”
ShareAction makes a number of recommendations to asset managers, especially those used by charitable asset owners, including:
- Publish rationales for voting decisions on all controversial votes, and on all abstentions and special exemptions.
- Vote to support all independent ESG resolutions, providing a published rationale to explain if any are not supported (‘comply or explain’ approach to voting).
Notes for editors:
- For more information, please contact Beau O’Sullivan at email@example.com or +44203 475 7859
- Data in the report were extracted from Proxy Insight, and directly from asset managers.
- ShareAction selected asset managers to be included in this research using three criteria:
- The top ten largest charity asset managers listed in the Investment & Pensions Europe (IPE) Reference Hub list. This is based on AUM in the sector.
- A list of charity asset managers widely used by the members of the Charities Responsible Investment Network.
- Asset managers who do not specialise in equities or hold a large proportion of the quoted businesses surveyed were removed from the list.
- Resolutions were selected from the Investment Association’s public register. The topics this report covers include: remuneration; board structure; auditors. These topics were chosen as they are all covered in the Corporate Governance Code and have been high profile in the media, in relation to Government policy and are largely covered in asset managers’ corporate governance policies.
- ShareAction completed a similar report for the 2017 AGM season.
- The Charities Responsible Investment Network was founded in 2013, and currently has 18 members with over £6bn in assets.
- ShareAction’s vision is a world where ordinary savers and institutional investors work together to ensure our communities and environment are safe and sustainable for all. Our mission is to unleash the positive potential of the mainstream investment system. To do this: We’re building a movement for change in our investment system by working with people inside and outside the industry to challenge the status quo; We’re unlocking the positive potential of the investment system by working with large and small investors to change unsustainable corporate practices; We’re reforming the investment system by advocating for change in the policies, governance, and incentives that drive behaviours in the investment industry.