PI Partnership – Association of Member Nominated Trustees BlackRock – PI Partnership


Janice Turner is co-chair of the Association of Member Nominated Trustees (AMNT)


HOW TO GET FUND MANAGERS TO ENFORCE YOUR VOTING POLICY


Pension scheme trustees who have tried and failed to make fund managers act on their voting policies will welcome pen- sions minister Guy Opperman’s creation of a taskforce to solve the problem. This was a recommendation in a report published by the Association of Mem- ber Nominated Trustees (AMNT). We have been working on this important matter for eight years and are delighted that we appear to be entering the home straight.


This is important. Pension schemes in- vest billions of pounds into companies and in doing so we need to ensure that they are being run in an optimal way to protect our members’ pensions. Fund managers’ views do not necessarily reflect those of pension scheme trustees or their beneficiaries and so it is imperative that it is our policies that are acted on. Voting policies, for the uninitiated, set out a range of environmental, social and gov- ernance issues that the asset owner con- siders financially material to the long- term sustainability of their investments. They indicate what action should be taken at AGMs if boards fail to meet such standards.


AMNT produced a free-to-download vot- ing policy for asset owners called Red Line Voting (redlinevoting.org). To cite a couple of examples, if the total remunera- tion of a company’s chief executive is 100 times greater than the average pay of their


employees then managers should vote against the remuneration report. Companies failing to make the necessary changes to mitigate global warming could be catastrophic. The AMNT’s policy advo- cates a vote against the re-election of the chair of the environmental sustainability committee [or, if they do not have one, the chair of the board]. We urge pension scheme trustees who do not have a voting policy to adopt one. They and their advisers may ask: “What’s the point of having a voting policy if our fund managers refuse to accept it?” The answer is that we are now obliged by the regulator to hold fund managers to ac- count for their stewardship of our invest- ments and to do this properly we need to have something to measure it against. So long as fund managers do not accept our policies, we must hold them to account. Most pension schemes have more than one fund manager. Many have more than a dozen. So, it makes no sense to delegate stewardship matters to fund managers whose policies are different and quite possibly contradictory.


The only way to hold your fund managers to account is by having your own policy that sets out your beliefs. Then you can compare your policies with theirs and ask why they have not acted along the lines of your policy. For example, AMNT research into 42 fund managers showed that many did not refer to climate change. When they did, they often did not specify how they might vote at an AGM if a company was failing in this regard. The minority who specified how they would vote most- ly limited themselves to the possibility of “supporting shareholder resolutions” re- garding global warming. Since share- holder resolutions are hardly ever pro- posed, voting policies that are limited to supporting shareholder resolutions are, in effect, taking no voting action at most AGMs.


So, a trustees’ action plan could be as follows:


Issue 99 | December–January 2021 | portfolio institutional | 33


– Adopt an ESG voting policy if you have not already – you can use Red Line Vot- ing as a starting point.


– Request that your fund managers align with it and operate it on a comply or ex- plain basis


– If rejected, you can include in your statement of investment principles that you are only delegating your steward- ship to your fund managers because they have refused to accept your policy. Also downgrade that manager in your service evaluation


– Compare your policy with those of your fund managers and hold them to ac- count for differences; get them to pro- vide a rationale in writing as to why their policy is not aligned with yours. If the rationale is insufficient, downgrade that


manager evaluation.


– If your investment consultants fail to help you to fulfil the responsibilities in your implementation statement, refuse to accept it.


– Tell your consultants that they should downgrade their rating of fund manag- ers who fail to respect their clients’ policies.


in your service


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60