Stewardship and investor engagement is helping to drive better returns for savers and investors, as the latest Stewardship Survey from the Investment Association (IA) shows that asset managers are regularly engaging with companies across a broad range of issues, such as executive pay, company strategy and financial performance.
The survey also gives the first meaningful snapshot of how gender diversity is effecting voting decisions, and shows that investors are placing a strong focus on gender diversity at the top of companies and voting on the basis of how diverse companies are.
In a sign that investors are pushing for more women to be in UK boardrooms, the survey finds that four in ten (42%) asset managers made a voting decision based on the gender diversity of a company in 2018, while more than half (56%) actively engaged with UK companies on the issue of gender diversity.
The findings are based on a survey of 59 members of the Investment Association, who manage more that £5.6trn of assets in the UK. The survey also finds that:
- Engagement leads to better investor decisions; 80% of asset managers reported that engagement led to better investment decisions.
- Asset managers are well-equipped to support their fund managers to engage with companies; the average firm has 33 staff participating in engagement and stewardship activity. With a mix of portfolio managers, analysts and stewardship specialists conducting this work.
- Asset managers are engaging regularly with companies they invest it; there were more than 7,000 individual engagements with UK companies, with each individual asset manager averaging 158 engagements.
- The stewardship process is significantly integrated into the investment process; nine out of ten asset managers used in-house resources to engage with companies.
Chris Cummings, Chief Executive of the Investment Association, said:
“Our members play a key role as stewards of the £7.7trn they manage on behalf of savers and investors. With more than 30 staff in every firm dedicated to stewardship activities, and with each asset manager making more than 150 engagements each so far this year, it is clear that the industry is taking its stewardship responsibilities seriously.
“Investors clearly want to see more women in the boardroom and senior management positions, and our study shows that companies who are lagging behind on gender diversity should expect investors to take action if they do not see enough progress.
“Initiatives such as the Hampton-Alexander Review have highlighted the need for greater diversity at the top of UK PLC. The fact that more than 40% of asset managers took a voting decision based on gender diversity shows that they are reflecting those concerns when it comes to engaging with companies and voting at their AGMs. Companies should expect greater scrutiny on diversity issues in the future, and should be acting now to address the imbalances they have at the top.