The £2bn Local Government Pension Scheme (LGPS) for Camden is the first to make use of the pass-through voting solution offered by Legal & General Investment Management (LGIM) and provided by shareholder voting fintech company Tumelo.
The platform allows the scheme to vote directly in line with its responsible investment values including chief executive officer remuneration and climate change.
The Tumelo platform enables LGIM clients such as pension schemes to apply their preferred voting policy to shareholder proposals across their pooled fund holdings and applies to a large number of LGIM funds at the point of launch, it was announced.
Tumelo has provided ‘expression of wish’ voting capabilities to LGIM and their clients since September 2020, allowing them to communicate their voting preferences, it added.
With ‘expression of wish’ voting, clients do not have a direct say on their proportional vote, and although fund managers may take the clients’ views in to account, the fund managers’ voting may not necessarily align to their clients’ preferences.
“This potential for misalignment is exacerbated for clients invested in the same securities across multiple investment managers’ funds, who may vote differently to each other,” Tumelo added.
However, Tumelo’s pass-through solution enables pooled-fund investors to vote their shares in proportion to the value of their investment in the fund, giving them the flexibility to engage in voting for the first time, or continue to delegate voting activity to fund managers should they choose.
Clients may apply their preferred voting policy or vote on individual issues, while their manager votes the rest, it said.
For policies, Tumelo added, clients can bring their own, or build/select one from any proxy advisor. Once a policy is chosen, clients can always override the recommendation through an easy-to-use interface and smart notifications. Any votes clients don’t place fall back into the fund manager’s own voting allocation.
For Candem pension scheme, while votes in its segregated mandate are cast in line with its values via a bespoke voting policy by proxy advisor PIRC, votes attached to its pooled funds were previously cast by LGIM. The new pass-through voting solution enables Camden to apply its voting policy consistently across its entire book.
This arrangement ensures that both Camden’s segregated mandate and pooled-fund investments are voted in the same direction, strengthening its stewardship. Examples of the types of issues Camden will now be able to direct their vote on include CEO remuneration and climate concerns.
Rishi Madlani, chair of pension committee at Camden, said: “Since 1996, we have voted equities in segregated mandates with our bespoke vote policy. Yet, for pooled funds we have always been forced to accept the fund managers’ policies, which can be different to our own. This has led to misalignment of voting across our portfolio and sometimes with our own responsible investment beliefs.”
He added that the scheme now has “one strong voice in the market on the most important issues for the scheme and its members, such as curbing CEO remuneration and combatting the climate crisis”.
Georgia Stewart, CEO of Tumelo, said: “Investors, whether retail or institutional, are becoming increasingly aware of the power they have to make a difference with the companies they invest in. At Tumelo we help amplify their voice and ensure their money is working the way they want it to.”