Tuesday 16 April 2019 1:46 pm | Updated: Monday 03 June 2019 1:06 am

Asset management firms urged to increase stewardship efforts

Asset management firms have been urged to increase the level of engagement and guidance with the firms they invest in.

Institutional investors only have “one-hand” on the wheel in regards to stewardship, advisory firm Willis Towers Watson warned in a report published today.

The firm called on six global asset managers – Blackrock, Legal & General Investment Management (LGIM), Northern Trust Asset Management, State Street Global Advisors, UBS Asset Management and Vanguard – to lead the way in redoubling stewardship efforts.

Stephen Miles, head of equities at Willis Towers Watson, said: “Some may see it as an inconvenient responsibility as it involves time-consuming and, at times, uncomfortable conversations with company management, but stewardship is a critical part of corporate oversight and value creation within the industry.

“There should be no place for half hearted, reactive stewardship and there is a huge opportunity for those who really step up.”

The call for action comes as LGIM, which around £1 trillion assets under management globally, revealed that it voted against a record number of companies globally last year, with board diversity, climate change and audit issues becoming more prominent concerns.

Sacha Sadan, director of corporate governance at LGIM, said the firm was “encouraged” by the increase but “there remains more to be done and real success will be dependent on collaboration”.

Jane Sydenham, investment director at Rathbone Investment Management added: “We are now entering the next phase in shareholder activism.

“Across the whole industry investment managers are realising that their clients, investors or shareholders want to see companies taking on the management where there is a need.

“The rate of change has accelerated rapidly particularly in the past five years. Whereas in the past they didn’t feel a moral duty to do this, increasingly now they do.”