“It’s totally unacceptable that fund managers are unable or unwilling to respond to reasonable requests from pension funds for information on how their votes were cast,” pensions minister Guy Opperman said in response to a report that found trustees are struggling to get hold of some basic information.
Dalraida Trustees surveyed 43 asset managers and found most were unable to provide details of how they exercised their voting rights or engaged with the companies they invest in.
Only 33% were able to provide details of how they had used their influence in voting as investors.
Some 28% provided no information, while 40% said there was no information to report.
The exercise of voting rights is a key way for pension trustees to ensure they are meeting their fiduciary duties to act in the best interests of their members.
This has become increasingly important when holding companies to account on the extent to which they meet environmental, sustainable and governance (ESG) goals.
Lacking data
When it comes to engagement, asset managers similarly lack appropriate data required by pension scheme trustees.
Only 23% of managers were able to provide detailed information on engagement they undertook, a further 19% were able to provide partial information.
Some 42% of managers provided no information on engagement, while 16% said that there was no information to report.
Trustees of both defined benefit, defined contribution and hybrid schemes are required by law to create an annual implementation statement, which outlines how their policies on exercising rights, including voting rights, and engagement with their investments have been undertaken.
David Fogarty, director at Dalriada Trustees, said: “As trustees, we need to be able to show members what action we are taking in terms of voting and engagement on the assets we govern on their behalf.
“Yet, we are in a position where we are receiving insufficient information from the asset management community. We are seeing managers marketing funds for their ESG credentials, but they are failing to provide clear evidence of the actions being taken; clearly, this needs to change.”
Editor’s Note: In association with our sister publications, International Adviser has launched a Campaign for Better Governance.
It will see us shine a spotlight on investment companies as well as the businesses in which they invest.
