The Association of Member Nominated Trustees (AMNT), the UK body which represents trustees at funds with more than £600bn (€826bn) in combined assets, says it is planning a mechanism to implement its new environmental, social and governance (ESG) ‘Red Line Voting’ initiative.
Red Line Voting is AMNT’s ground-breaking initiative with tightly drawn voting instructions to help pension schemes that invest in pooled funds to direct how the votes associated with the companies they invest in are cast. The Red Lines will cover the full ESG (environmental, social and governance) remit.
“We need to get a critical mass” of pension schemes, said AMNT co-Chair Janice Turner whose brainchild it is. She said AMNT plans to set up a mechanism of some sort, possibly called ‘the Red Line Voting Association’ or something similar, adding: “That’s our future plan.”
She said voting at company AGMs was “still the preserve of the rich and powerful” – i.e. large investors, and that trustees at smaller funds are “disenfranchised”. Trustees at smaller funds were in a situation where they are held accountable but have no actual power.She made it clear that the Red Lines are a set of instructions and NOT guidelines. Asset owners can chose which of the ‘concrete, practical and specific’ red lines to adopt. The whole thing is on a comply or explain basis – which is to say that an asset manager can vote against the red line, but will have to explain why to the client. She said the project aims to make trustees “active stewards of their assets for the first time ever”.
Speaking at the formal launch of the project in London yesterday, Turner said it had already started to figure in the manager selection process where asset owners choose fund managers, though she declined to be specific. She also reported that clients had been told there’s no problem regarding voting via pooled funds, which has long been put forward as an obstacle.
Simon Howard, CEO at UKSIF, the UK Sustainable Investment and Finance Association which has had input into the initiative, said Red Lines would “act as an accelerator”; it would be good for ESG professionals in that it would counter the ‘clients aren’t asking for this’ argument. Link.