UK pension regulator pressed on asset owner stewardship (Update)

(Updates with comment from the Pension Regulator)

UKSIF, the UK Sustainable Investment and Finance Association, has called on the Pensions Regulator to do more to promote good stewardship from leading pension funds.

It said that encouraging demand for stewardship from asset owners is vital to the success of the now two-year-old Stewardship Code.

Some 53 asset owner statements are currently declared on the website of the Financial Reporting Council watchdog. And there are 185 companies listed under the asset manager category – although this includes the likes of BAE Systems Pension Funds Investment Management, BP Investment Management and the Central Finance Board of the Methodist Church who could arguably be classed as asset owners.

Other manager signatories include Nestlé Capital Management and Oxford University Endowment Management. There are 14 service providers who have made statements. Link

UKSIF, in its response to the FRC’s consultation on how to revise the code, which closed last week, also highlighted the need for it to more explicitly outline the role of environmental, social and governance (ESG) risk factors in good stewardship.“Although we broadly welcome the changes to the Stewardship Code, it needs to go further in encouraging asset owners to demand responsible stewardship practice from their service providers,” said UKSIF Chief Executive Penny Shepherd.

She said the proposals were a ‘missed opportunity’.

The revisions to the code come ahead of the launch of the much-anticipated Kay Review, headed up by respected economist John Kay into the UK equity market. UKSIF hosted a debate on the topic last week, focusing on the role of fiduciary duty of shareholders in the context of their engagement in investee companies.

The Pension Regulator, which oversees work-based schemes, typically does not comment on individual funds’ investment strategy.

A spokesman said: “We welcome the Stewardship Code and its role in highlighting the important issue of trustees fully understanding their roles and responsibilities in relation to investment, including environmental, social and governance obligations.

“We have already produced guidance for trustees on how to improve communication to members in general, and training for trustees on investment issues, and are considering what more we can in future work.”