Fund firms offered stewardship update

Asset managers offered new guidance on corporate stewardship.


Joe McGrath

The European Fund and Asset Management Association (EFAMA) has released a new Stewardship Code, to guide asset managers in how they conduct sustainable investment business.

In an announcement at the end of May, the trade group said it hoped that the new guide would assist fund firms in drawing up stewardship policies in areas such as engagement with investee companies and voting.

A notable new inclusion in the policy is a section on how asset managers should carry out their shareholder rights on behalf of asset owners. The update is likely to be welcomed by investors and consultants, who feel that many ESG approaches have been muddled.

“It feels likes there is an awful lot of confusion in the market about what ESG means,” said Simeon Willis, chief investment officer at investment consultancy XPS Group.

“I have spent a lot of time thinking about it in the past two years, but I have been advising on it in my whole career. Even with that background, it confuses me how it is being presented. People are now very familiar with the term ‘ESG’ but are less familiar with how it might impact them or feature in their decision making.”

The scope of what is covered in EFAMA’s code on investee company engagement has also been updated to include environmental and social concerns, compliance, culture and ethics, and performance and capital structure.

In a media statement, a spokesperson for the trade group said it had “revisited” its earlier Code of External Governance in drawing up the new document to bring it in line with the revised Shareholder Rights Directive.

“The EFAMA Stewardship Code highlights how, through stewardship, asset managers can encourage best business and management practices in companies on environmental, governance, human rights and social challenges,” the spokesperson wrote.

“EFAMA believes it is not only part of an asset manager’s fiduciary duty to protect and enhance clients’ assets, it also encourages long-term value creation and long-term sustainability.”

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