More than half of asset managers that applied to be signatories of the UK Stewardship Code this year have been successful.
The Financial Reporting Council (FRC) granted 125 signatories this week, representing £20trn in assets under management. Out of 189 applications, 147 were from asset managers. Some 90 of these – 61% – made the list.
Those that did not make the list include Schroders, Morgan Stanley Investment Management and Rothschild Wealth Management.
The UK Stewardship Code is a set of principles for asset owners and managers to ensure they are meeting expectations on how they are managing money on behalf of savers and pensioners and how this leads to sustainable benefits for the economy, the environment and society.
Previously, to become a signatory, applicants had to write a policy statement about their stewardship. This year, they were required to show detailed evidence of how their actions complied.
Professor Kevin Haines, director of Sustainable Capital, said requiring evidence of actual impact was a “step in the right direction”.
He added: “One of the major barriers to the growth of ESG is that there is not yet a real agreement on exactly what it means. There is an urgent need for greater clarity in our ESG definitions and regulation if we are to overcome this and win people’s confidence.
“There is currently a huge amount of energy and thought going into attempts to resolve the question about how best to measure sustainability and impact. Lots of companies make use of one of the many ESG rating agencies to address this issue, but the difficulty we have is that people do not like inconsistency, meaning there is demand from investors for consistent sustainability reporting internationally.”
Successful applicants
Successful applicants this year included abrdn and Mercer.
Mike Everett, head of stewardship, ESG investment at abrdn, commented: “We have supported the development of high standards of stewardship for many years and recognise the UK Stewardship Code 2020 as a significant further raising of the standards increasing the scope to all asset classes and widening its application to important aspects such as governance, risk management and collaborative engagement.
“We have found that the process of creating an annual report to demonstrate our achievement of the principles has challenged us to deliver more transparent disclosure, which we believe will benefit our clients and wider stakeholders who seek to assess our stewardship activities.”
Sylvia Pozezanac, president and CEO at Mercer UK, said: “Effective stewardship is critical in supporting sustainable economic growth. Mercer is proud to become a signatory to the 2020 UK Stewardship Code and to play our part in strengthening stewardship practices across the investment chain. We will continue to support our asset owner clients in raising stewardship standards and to embed further strong stewardship expectations across both our manager research and our investment solutions.”
Overall, two-thirds of applicants to UK Stewardship Code were successful this year. As well as asset managers these include 23 asset owners out of 28 that applied, and 12 service providers out of 14 that applied.
The FRC said it was “pleased to see” investors better integrating stewardship, and ESG factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts.
“There was also some strong reporting on underpinning governance activities,” it said.
Sir Jon Thompson, FRC CEO, added: “Congratulations to all those who have become signatories to the UK Stewardship Code, which is recognised globally as a best-practice benchmark in investment stewardship. The publication of this list delivers on the recommendations of The Kingman Review in respect of stewardship and demonstrates our continued commitment to serve the public interest as we transform to becoming a new regulator. We are proud of our robust approach to assessment and encourage those who have been unsuccessful to reflect on our feedback and apply again in future.”
The full list of signatories can be found here.
