We previously have posted about some of the concerns that faith-based asset owners (FBAOs) have on the voting policies of their asset managers. As covered in our previous paper, From Faith Values to Investment, proxy voting policy is a key element of our faith Investment Policy & Guideline (IP&G) framework. However, many FBAOs don’t directly control proxy voting for a variety of reasons. Instead, they rely on their asset managers to do this, which can present challenges, including reporting on proxy voting activity that varies widely by asset manager.
Fortunately, there is a new effort underway in the UK that may help.
The UK’s financial regulator, the FCA, has a Consultation Paper out on proxy vote reporting for asset managers, proposing ‘voluntary, standardised and comprehensive’ templates. This would allow managers to communicate their proxy voting activity to clients (such as FBAOs), with the goal of providing timely, accurate and comparable voting data, thus facilitating more accurate and comparable monitoring. The use of such templates could potentially benefit the asset managers as well, for example through improved efficiency from standardized workflows, versus customised requests from different clients.
Chair of the vote reporting group, Deborah Gilshan, emphasises that, ‘Voting matters. It provides important accountability mechanisms for investors to support and challenge the companies they invest in’. Additionally, she comments that, ‘the full value of voting is not currently realised across the investment chain. This value can be unlocked through better disclosure by investors about how and why they vote’.
The availability of clear proxy voting practices is of critical importance to asset owners; however, in our work with asset managers and FBAOs, we do not see many of these voting policies – for example our recent IP&G study update found only 41% of FBAO IP&Gs contained proxy voting guidelines. We are hopeful that the FCA’s efforts will ultimately lead to better support for FCI-compliant monitoring and voting guidelines in the future.
FBAOs are invited by the FCA (as asset owners) to provide their comments on this consultation paper by the September 21st deadline, and we encourage participation.