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Association of British Insurers says members back ‘stewardship mandate’ idea

Trade body also plans ‘Investor Exchange’ for non-members

The Association of British Insurers, the 300-member trade group, says its members would back the development of a ‘stewardship mandate’ to be included in investment contracts between asset owners and their fund managers.

“ABI members would support the concept of developing a ‘Stewardship Mandate’, to be included as part of the investment agreement, to clarify and govern the client’s stewardship requirements,” the ABI said.

This could include the agreed range of stewardship activities to be undertaken by the manager on behalf of the client such as an annual review of activities, or simply confirmation that the manager is a signatory to the Stewardship Code.

“By extension, we encourage stewardship to be incorporated into the Statements of Investment Principles,” the ABI adds in a new 36-page document on engagement called Improving Corporate Governance and Shareholder Engagement.

The ABI says a growing number of asset owners specify stewardship policies when allocating investment mandates – and that there has been a noticeable increase in the number of request for proposals (RFPs) seeking information on how stewardship issues are managed.

The ABI argues that asset owners have a responsibility to communicate their expectations clearly andincorporate this into both manager selection and the performance oversight of existing mandates.

The ABI also revealed that it would shortly formalise its proposals on collective engagements with companies with the launch of an ‘Investor Exchange’ for non-ABI members. The association will consult members on how to develop a methodology for identifying companies for engagement, “which would be complementary to existing investor engagement”.

The exchange would “enable any significant shareholder proactively to raise a concern on a particular UK-listed company with other shareholders through the ABI”.

This would be alongside the work the ABI is doing with fellow trade bodies the Investment Management Association and the National Association of Pension Funds on the Investor Working Group on Collective Engagement. This group is due to present its findings by the end of November.

The ABI’s Head of Corporate Governance, Andrew Ninian, said: “The ABI already facilitates an extensive programme of collective engagement. Given the success of this, we will be opening it up to non-ABI members and will set-up a formal Investor Exchange mechanism, so any significant shareholders can raise concerns via the ABI.”

The ABI has over 300 member companies accounting for £1.8trn in investments.