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Carillion: Aberdeen Standard, BlackRock explain stewardship approach

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Aberdeen Standard Investments (ASI) is looking “to beef up” its stewardship effort, its global head of stewardship and ESG investing told a parliamentary inquiry into the high-profile collapse of Carillion.

Euan Stirling told politicians ASI was looking to apply stewardship to all its investment teams in addition to having a strong central stewardship function.

“We’ll be able to be even more nosy than in the past,” he said.

Earlier in the hearing Stirling said that company management teams were “well-drilled” in how to present a case for investing, and that asset managers’ job was to “scratch the surface” to find out more.

The inquiry is a joint effort by the UK parliament’s Work and Pensions and Business, Energy and Industrial Strategy committees. In today’s session, the seventh, politicians questioned institutional investors about their investments in and engagement with the company.

Amra Balic, head of BlackRock’s investment stewardship team for the EMEA region, also gave evidence.

Balic explained to the committee members that BlackRock sold shares in Carillion when falls in the share price and the suspension of dividends meant it fell out of certain indices. On the active management side BlackRock did not hold Carillion shares because of concerns about the company, she said.

BlackRock previously confirmed that it held long and short positions in Carillion, the majority of which were in long-only index-tracking portfolios.

Balic said BlackRock was doubling the size of its global stewardship teams to 60, and at this point in time did not feel the need to change its stewardship process.

Passive investors have been accused of being poor stewards and many have been being making a concerted effort to dispel this perception, stepping up their communication about their stewardship activity and increasing dedicated resources.

In a recent FT interview George Walker, chairman and CEO of employee-owned manager Neuberger Berman, said he was “frustrated that the big passive guys are, at least in the press, stealing the stewardship mantle”.

Investment research firm Morningstar last year said that index-tracking managers such as BlackRock were increasingly taking an active role in the oversight of investee companies and that passive investing did not lead to an abdication of stewardship responsibilities. 

The Financial Conduct Authority, the UK’s regulator, will later this year launch a consultation on its Stewardship Code for investors.

 

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