Political pressure and regulatory change are eroding asset owner rights with some in the asset management community adjusting their stance towards responsible investment. Against this backdrop, it essential for asset owners to reassert their beliefs and be clear on their expectations of others, including asset managers. Strong engagement with asset managers can be used to test the alignment of interests and ensure that stewardship efforts are being properly focused.
Commenting on why investors should double-down on their stewardship strategies now, Chris O’Bryen, Investment Associate Consultant, Stewardship Lead, Hymans Robertson, says: “Stewardship and responsible investment are facing significant challenge. Over the last few years, we have seen a raft of policy changes from governments that have had a direct impact on how some in the investment world approach responsible investing.
“We’ve also seen updates to the UK Stewardship Code that mean asset owners will have to do work harder to protect and assert their rights. The new Code comes into effect in 2026, while the focus is on more effective stewardship, it now includes tailored principles and allows for flexibility in style and frequency of reporting. Without uniform reporting, investors will have to increase their level of due diligence when selecting an asset manager. This will ensure that the partner they choose is fully aligned with their goals and beliefs, and will act to help them assert their rights.”
Commenting on how asset manager selection processes are even more critical for investors now, O’Bryen adds: “It’s no secret that some asset managers are responding to the current ‘ESG backlash’. The changes to the Code, the tailored principles and flexibility in reporting format in particular, could see those that have changed their approach in-line with the backlash movement, become signatories. This means, once the updated Code comes into effect, signatory status alone may not be a strong enough indicator of an asset manager’s capabilities, approach or beliefs. Investors will need to dig deeper when doing their due diligence to select or retain a manager. Ensuring that their knowledge of evolving events remains current through regular training is key to maintaining oversight and exerting control. Without this, they may find that they choose or retain a manager that takes decisions that inadvertently curtail their rights as asset owners.”
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