ESG roundup: UKSIF, Stewardship Code, YouGov
UK - Assets under responsible ownership in the UK have passed €1trn for the first time, and with €1.2trn account for 18% of the total responsible investment market in Europe despite the double-dip recession, according to the UK Sustainable Investment and Finance Association (UKSIF).
Penny Shepherd, UKSIF chief executive and co-ordinator of National Ethical Investment Week, said: "Auto-enrolment is a great opportunity for millions of UK workers to save for tomorrow, especially those on lower incomes, and it's vital they get a chance to understand the role of stewardship and responsible ownership in protecting their pension savings.
"The pensions regulator must shine a light on this by insisting that all pensions qualifying for the auto-enrolment scheme publicise whether they have a responsible or ethical investment policy.
"With almost a trillion pounds of assets now invested responsibly in the UK, the simple message is that people want to make money and make a difference with their pensions and investments, and they can."
Research released for National Ethical Investment Week - which takes place 14-20 October - found that more than a third (42%) of British adults with investments think pension schemes affecting as many as 10m people should sign up to the government-backed Stewardship Code, which aims to encourage responsible ownership by large investors.
When the situation was explained, 45% of respondents agreed that company pension schemes should have to disclose whether they have a responsible or ethical investment policy to qualify for auto-enrolment.
Meanwhile, the government and industry also need to raise awareness of the Stewardship Code because 94% of surveyed respondents with pensions or investments said they had never previously heard of it.
The national YouGov poll also found that:
• 55% of investors want their provider, financial adviser or pension trustees to send them occasional information on whether their fund is acting responsibly, such as an annual report on responsible investment
• One in three respondents with a pension would like to see at least some of their pensions invested in healthcare (35%) or renewable energy (33%) - the proportion of people who would be interested in a green and ethical pension if they had the option available rose to 12% this year
• 46% of relevant adults want some of their pensions or investments allocated to impact investments that produce both a financial and a social or environmental benefit
The total size of the UK responsible investment market is €1.2bn, according to figures compiled by UKSIF and released by Eurosif in October.
The total size of the European market stands at €6.7bn.
In other news, a consultation document on stewardship has been launched by a steering group of companies, investors and other key stakeholders.
Areas covered in the consultation document - entitled 'Improving engagement practices by companies and institutional investors' - include:
• Whether the nature of the discussion between a company and its investors needed to change, with more emphasis on a dialogue, which built and encouraged a long-term relationship with, and commitment to, the company
• What improvements can be made to the process of holding engagement meetings
• Whether companies and institutional investors should seek feedback on the quality of meetings, and how that might be most effectively done
Steering group chairman and former chair of water company Severn Trent
Sir John Egan said: "The steering group is firmly of the view that the health of the engagement process is one of the drivers that increases alignment between a company and its owners, and that transforming the engagement interaction can create value for both parties."
The consultation is the result of dialogues conducted by the 2020 Investor Stewardship Working Party, during which company chairmen described the shortcomings they had experienced in investor engagement.
This led to the production in March of the working party's report '2020 Stewardship - Improving the quality of investor stewardship', containing recommendations for improving engagement practices.
The working party has asked the Institute of Chartered Secretaries and Administrators to take forward two of the report's recommendations, by developing a good practice guide to improve the quality of engagement activity, and identifying more ways for companies and institutional investors to seek and provide feedback on the quality of meetings.
The institute established a steering group to help carry out this work.
The group is now seeking responses to the consultation by 30 November.
Respondents are also asked to comment on a list of practical measures designed to make meetings more productive.
Subject to the outcome of the consultation process, the Steering Group intends to issue guidance in March 2013.