Cazenove Capital, part of the Schroders group, has written to all asset managers on its approved fund list asking them to take action on behalf of their clients this voting season.
Cazenove Capital and Schroders Wealth Management combined are responsible for £62bn of assets, with £29bn invested in collective investment funds.
The firm has written to 93 of these fund managers, who in aggregate control over £30trn of assets, to set out its view on voting best practice.
The letter, seen by FTAdviser, said: "As a significant investor in third-party funds, we have a role to play in encouraging change across the wider investment industry. As part of our engagement with managers, we believe it is important to share what we consider to be the most effective ways of promoting more sustainable business practices within financial markets and among participants.
"As AGM season gets underway, we are writing to all our managers who are able to vote to highlight our key recommendations with regards to voting."
The firm said it believes that best practice on voting includes the following:
- Publishing a voting policy/guidelines alongside a commitment to developing and updating the policy to reflect evolving ambition;
- Publishing voting records in a timely manner and in an accessible format;
- Committing to voting on resolutions at all AGMs/EGMs except where you may be restricted from doing so;
- Publicly pre-declaring voting intentions for important and or more controversial ESG shareholder resolutions;
- Intelligently using votes to support environmental and social shareholder resolutions;
- Using voting as a form of escalation where companies are failing to make sufficient progress on ESG issues; and
- Using voting as a form of escalation where companies are deemed to be climate laggards, to include top global emitters and fossil fuel financing banks.
Meeting these recommendations ensures managers are not just talking about sustainability and ESG but are actually taking demonstrable action, it said.
Chloe Mallo, investment manager at Cazenove Capital, said: “Fund managers should be using their votes to hold the underlying companies in which they invest to account on ESG issues.
“Our letter clearly sets out our interpretation of best practice.
“We have committed to this approach for the investments we hold directly on behalf of our clients. We encourage managers that we work with to do the same.”
The firm said this public letter is a first and demonstrates the important role the sector can play in steering the broader industry towards best practice in sustainable investment.
It said collective investment funds constitute a significant share of its investments on behalf of individuals, family offices, endowments and charities.
“This puts us – and other wealth managers – in a powerful position to drive change throughout the asset management industry,” the firm said.
The letter will be followed in the coming months by its annual manager questionnaire, which requests more detailed information on how asset managers are integrating ESG considerations into their investment processes and the action that they have taken.
Stuart Derrick, head of management selection and co-signatory of the letter, said: "ESG considerations are central to our fund selection process. We would encourage all managers to follow these voting principles, irrespective of whether or not they are managing an ESG or sustainable fund.”
Last week, Schroders made changes to its wealth management leadership team, appointing Peter Hall as chairperson and Mary-Anne Daly as global head of wealth management.
sonia.rach@ft.com
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