Finance

BlackRock, abrdn plus 123 others make the cut for tough ESG code, firms with £12tn AUM fail

A third of asset managers and other groups that applied to become signatories to a tough governance code for investors failed to reach the required standards for inclusion.

The UK’s Financial Reporting Council, which assessed the list, said only 125 applicants with £20tn in assets under management passed the review to become signatories to the Stewardship Code.

This included firms like BlackRock, abrdn, Fidelity International, Aviva Investors, Man Group, Aviva Life and Pensions UK Ltd, Barclays Bank UK Retirement Fund.

There were 189 applicants in total,  including 147 asset managers, 28 asset owners, including pension funds and insurers, and 14 service providers, including data and information providers and investment consultants.

The failure of 64 applicants with £12tn assets under management, a third of the total number of firms, comes as pressure grows on fund managers to ensure they are clear and transparent about their approach to environmental, social and governance investing.

The revamped code comes amid a surge in ESG assets, which have reached a record high during the Covid pandemic.

Data from Morningstar show assets in sustainable investment funds grew by 12% to $2.24tn globally at the end of the second quarter, with asset managers launching 177 new sustainable products to cater for rising demand.

EU policymakers have already taken steps to curb ‘greenwashing’ with the introduction of the Sustainable Finance Disclosure Regulation in April. The new rules are designed to help investors decipher which investment funds employ the highest ESG standards.

READ DWS greenwashing probes shift fund industry into high alert

The FRC’s Stewardship Code comprises a list of principles for asset managers, owners and service providers.  

Firms that failed to make the cut did not address all the principles or sufficiently evidence their approach, instead relying too heavily on policy statements, the FRC said.

The FRC also found weaknesses in firms’ reporting on the approaches to review and assurance, and monitoring service providers. 

“We would also like to see more focus on identifying areas for improvement,” the FRC said in a statement. 

The FRC said it was pleased with investors better integrating stewardship, and ESG factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts.

There was also some strong reporting on underpinning governance activities, the FRC said.

To remain signatories, organisations will need to continue to improve their reporting as market practice and expectations evolve. 

Adherence to the code, which took effect in January 2020, is an indicator of the extent to which asset managers and owners invest money for savers and pensioners in line with 12 principles relating to sustainable benefits for the economy, environment and society.

There is a separate set of six principles for service providers – investment consultants, proxy advisors, data providers and others – covering policies, processes, activities and outcomes of effective stewardship.

Unsuccessful applicants can reapply in future application windows. The next opportunities are 31 October 2021 and 30 April 2022.

Unsuccessful applicants are encouraged to consider the individual feedback provided along with the upcoming annual review of reporting to be published in November.

The FRC’s chief executive, Sir Jon Thompson, said the publication of the list delivers on the recommendations of The Kingman Review “in respect of stewardship and demonstrates our continued commitment to serve the public interest as we transform to becoming a new regulator.”

The list of successful firms are below:

ASSET MANAGERS
Aberforth Partners LLP

abrdn (formerly Standard Life Aberdeen)

Aegon Asset Management UK plc

AGF International Advisors Company Ltd.

AllianceBernstein L.P.

Amundi Asset Managment

Arcus Infrastructure Partners LLP

Ardea Investment Management Pty Ltd

Artemis Investment Management LLP

Aviva Investors

AXA Investment Managers

Baillie Gifford and Co

BlackRock Inc

BlueBay Asset Management LLP

Brewin Dolphin

Capital International Limited

Cardano Risk Management Limited

Castlefield Investment Partners LLP

CCLA Investment Management

Central Finance Board of the
Methodist Church and Epworth
Investment  Management

Church House Investments Limited

Coutts & Co

CQS (UK) LLP

Dimensional Fund Advisors Ltd

Downing LLP

DWS Investments UK Limited

Evenlode Investment

Fidelity International

Findlay Park Partners LLP

First Sentier Investors

Franklin Templeton

Fundsmith LLP

GAM International Management Ltd (GIML)

Generation Investment Management LLP

Genesis Investment Management, LLP

Gresham House Asset Management Limited

Herald Investment Management Limited

Hermes Fund Managers Limited (The
international business of Federated Hermes)

HSBC Global Asset Management Ltd

Impax Asset Management

Invesco Asset Management Limited

Investec Wealth and Investment Limited

J O Hambro Capital Management Limited

Janus Henderson Investors

Jupiter Fund Management plc

Kiltearn Partners LLP

LaSalle Investment Management

Legal & General Investment Management

Lindsell Train Limited

Liontrust Investment Partners LLP

Lodbrok Capital LLP

Lombard Odier Asset Management
(Europe) Ltd

Longview Partners

Loomis, Sayles and Company, L.P.,
and Loomis Sayles Investments, Limited

M&G Investments

Macquarie Investment Management
Europe S.A.

Majedie Asset Management Ltd

Man Group

Manulife Investment Management
Europe Limited

Marathon Asset Management Limited

Martin Currie Investment Management
Limited

Mayfair Capital Investment Management

Mercer Global Investments Europe Limited

Metropolis Capital Ltd

MFS Investment Management

Mirabaud Asset Management Limited

Montanaro Asset Management

Newton Investment Management

Oldfield Partners

PineBridge Investments Europe Limited

Quilter plc

RBC Global Asset Management

River and Mercantile Asset Management LLP

River and Mercantile Investments Limited

Robeco Institutional Asset Management B.V.

Royal London Asset Management (RLAM)

Ruffer LLP

Sarasin and Partners LLP

Slater Investments Limited

SVM Asset Management Limited

Target Fund Managers Limited

TwentyFour Asset Management LLP

UBS Asset Management (UK) Ltd

Union Bancaire Privée, UBP SA

Vanguard Asset Management, Limited

Veritas Asset Management LLP

Veritas Investment Partners (UK) Limited

Vontobel Asset Management

Walter Scott and Partners Limited

Wellington Management Company LLP

ASSET OWNERS

Aviva Life and Pensions UK Ltd

Barclays Bank UK Retirement Fund

Brunel Pension Partnership Limited

BT Pension Scheme

Church Commissioners for England

Coal Staff Superannuation Scheme
Trustees Limited

Environment Agency Pension Fund

Greater Manchester Pension Fund

Hampshire Pension Fund

JPMC UK Retirement Plan

LGPS Central Limited

London LGPS CIV Limited

M&G plc

Nest Corporation

Parliamentary Contributory Pension Fund

RPMI Railpen

Scottish Widows Group Limited

Strathclyde Pension Fund

The Church of England Pensions Board

Trustees Of The Mineworkers’
Pension Scheme Limited

Universities Superannuation Scheme – USS

West Midlands Pension Fund

Worcestershire County Council
Pension Fund

SERVICE PROVIDERS

Aon Solutions UK Limited and
Aon Investments Limited

Glass Lewis and Co. LLC

Hermes Equity Ownership Services Limited

Hymans Robertson LLP

Institutional Shareholder Services Inc.

Investment Association Services Limited
(using the trading name Institutional Voting
Information Services (IVIS))

Lane Clark & Peacock

Mercer Limited

Redington

Sustainalytics, a Morningstar company

Willis Towers Watson

XPS Investment Limited

To contact the author of this story with feedback or news, email Penny Sukhraj

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