The Pension Protection Fund, the UK’s pension lifeboat scheme with £11.3bn (€14bn) in assets, has named Hermes Equity Ownership Services (EOS) as its new voting and engagement advisor – meaning a loss for incumbent F&C and its Responsible Engagement Overlay (REO) offering, whose contract term had come to an end.
“The new advisor will vote shares, monitor portfolio companies for ESG [environmental, social and governance] risks and, where concerns arise, engage company management on these concerns,” the PPF said.
A spokesperson confirmed that Hermes EOS, the engagement arm of the Hermes fund management business that is ultimately owned by the BT Pension Scheme, is replacing F&C and that it “met all our requirements”. She declined to disclose the value of the new contract with Hermes EOS, which has over £89bn in assets under advice.
UN Principles for Responsible Investment signatory the PPF is committed to exercising its ownership rights and to being transparent about its responsible investment activities.
Hermes EOS will overlay the segregated portfolios at the PPF, which outsources stewardship to the relevant fund managers at its pooled funds.According to the PPF’s most recent stewardship report (link), for the first quarter of 2012, F&C engaged 33 of the companies in the fund’s portfolio on issues such as corporate governance, ethics, human rights, labour standards, public health, environmental management and climate change. F&C said its intervention, either solely or in collaboration with other investors, saw 12 “milestone” changes at companies.
An engagement highlight was a meeting with management of tyre giant Bridgestone in Tokyo to discuss allegations about child labour at the company’s operations in Liberia. In the first quarter the PPF voted on 688 resolutions at 70 company meetings, supporting management in 83% of votes.
A spokesperson for F&C was not immediately able to comment.
Separately, Hermes Fund Managers has issued a paper on Islam and responsible ownership which argues that transparency and accountability by investors is now more important than ever.
Elsewhere in the UK, sustainable research firm EIRIS has released figures showing there is currently £11bn invested in UK green and ethical funds – up from £4bn 10 years ago.