Eighty percent of pension funds in the U.K. screen money managers for stewardship activity — that is, the active monitoring of and engagement with companies, as well as exercising their voting rights, the National Association of Pension Funds found in its annual engagement survey, published Monday. That has increased from what 71% in 2013 and one-third in 2004, when the NAPF conducted its first survey.
There also was a growing recognition of the effect environmental, social and governance issues can have on financial returns. This year, 90% of pension funds acknowledged the potential effects of ESG on returns, up from 81% in the 2013 survey.
One area of engagement that has declined, however, is that between investment consultants and their pension fund clients: 41% of funds said the issue of stewardship was not raised by consultants in discussions compared with 31% last year.
“Consultants have a role to play,” said Sacha Sadan, director of corporate governance at Legal & General Investment Management, at a presentation to journalists Monday. “They are the gatekeepers for (many) of the funds, especially the smaller funds.”
LGIM, other managers and asset owners were present at the launch of the NAPF's stewardship accountability forum, which coincided with the publication of the survey.
The forum brings pension funds together to quiz money managers on their approach to stewardship. The first forum, held Monday, brought together 32 pension funds representing £230 billion ($360.9 billion) of assets.
Responses to the survey were received from 50 pension funds with a combined £419 billion of assets.