The UK Investment Consultants Sustainability Working Group (ICSWG) has published guidance designed to improve the engagement reporting delivered by asset managers and platform providers to institutional clients.
The investment consultant group's engagement reporting guide (ERG), published today (3 November) is the first item in a series of guidance for asset managers being released by the ICSWG over the coming months.
The ICSWG said regulators are increasingly leaning on asset owners to encourage active stewardship but said obtaining appropriate data can be "challenging" - with managers citing the high burden created by different information requests from different parties.
In order to address this challenge, the investment consultants in the ICSWG have worked with other key stakeholders to agree a common guide for engagement reporting. It said, while the consultants involved are not precluded from seeking other data relating to engagement activities, agreement on this core framework is intended to enable efficiency and thereby significantly improve transparency.
The group said the ERG was designed to bring "decision-useful" manager engagement reporting down to investment mandate level - providing targeted engagement metrics and case study formats to help investors evaluate their managers' stewardship, with an emphasis on the outcomes achieved.
The information captured is designed to sit alongside the reporting which asset managers typically provide in accordance with the UK Stewardship Code. The guide is also designed to work alongside the Pension and Lifetime Savings Association's vote reporting template, which requests and collects engagement data from asset managers and platform providers.
The full guide is free to download and is available at https://www.icswg-uk.org/resources.
The ICSWG will shortly be releasing further guidance for asset managers, which will cover a range of subjects including ESG reporting metrics and consultants' responsible investment manager assessment criteria.
Barnett Waddingham policy and strategy lead and ICSWG stewardship workstream chair Amanda Latham said: "Long term, sustainable investment practices are of paramount importance if we are to encourage positive change in the world.
"Effective stewardship goes beyond voting on shares. Reporting on broader engagement activities improves accountability and highlights the impact that the asset management industry has on a wide range of issues. Undertaking effective stewardship is one of the ways asset owners like pension trustees can create long-term value for beneficiaries leading to sustainable benefits for the economy, the environment and society. This guide should help improve engagement reporting, bringing greater transparency and consistency to the process, and shows the importance of collaboration across the investment consulting firms to drive better stewardship."
Willis Towers Watson head of equities and investment stewardship Stephen Miles added: "Good stewardship can be the most powerful function the asset management industry performs. But stewardship has too often been placed at the bottom of asset owner agendas given measurement challenges. We hope this new guide will help asset owners, asset managers and investment consultants more consistently communicate, and appreciate, high quality stewardship."
The ICSWG, formed in 2020, is a collaboration between 19 firms taking action to support and accelerate sustainable investment initiatives in the UK.
The ICSWG members are: Aon, Barnett Waddingham, Bfinance, Broadstone, Buck, Cambridge Associates, Cardano, Hymans Robertson, Isio, Lane Clark & Peacock, Mercer, MJ Hudson Allenbridge, Momentum, Punter Southall, Redington, River and Mercantile, SEI, Willis Towers Watson and XPS Investment.