Money managers and asset owners should expand their governance activities to other asset classes, particularly bonds, in order to improve stewardship in the U.K., according to a money management task force led by HM Treasury.
In a report published Monday, a group of money managers, market participants and regulators led by HM Treasury said stewardship should be better integrated into investment processes. And in order to achieve better standards of stewardship, the task force recommended that investors take a more active role as bondholders.
Among other recommendations, investment managers should be provided with guidance on bringing forward their own resolutions when companies are not responding to their concerns, the task force said. The U.K. Investment Association will work with the industry to develop the guidance.
The task force also called on pension funds to better explain how their stewardship policies and activities are aligned with plan participants' views, recommending that the government facilitates the creation of a "Council of U.K. Pension Schemes."
The task force also supported the U.K. government's intention to change the company law under which large U.K. public and private corporations will report on their impact on climate change using standards developed by the Taskforce on Climate-related Financial Disclosures. Proposed in a report published on Nov. 9, the change would apply to all companies in the U.K. starting in 2025, but with a significant portion of mandatory requirements in place by 2023.
"The U.K.'s stewardship standards are internationally respected and contribute to our standing as a leading global asset management center. These recommendations will encourage more effective stewardship right across the investment chain and help the asset management sector continue to support sustainable activity as we build back better and greener," John Glen, member of Parliament and economic secretary to the Treasury, said in a news release Tuesday.
Keith Skeoch, chairman of the task force's stewardship working group and chairman of the U.K. Investment Association, said in the release: "Investment is a critical part of how we shape our economic future and will have a profound influence on the quality of the recovery from the coronavirus crisis, not just in the U.K. but around the world. We need to seize this moment to ensure stewardship is further embedded at the heart of the investment process, so that we can create long-term sustainable value that benefits businesses, communities and the environment."