Germany’s nuclear waste disposal fund plans to put more emphasis on climate change when selecting asset managers.
Speaking on a webinar yesterday, Clara Mokry, Kenfo’s deputy head of sustainability, said the fund “would like to see more consistency between a manager’s overall climate approach and their approach for our mandate”.
She added that Kenfo was starting to prioritise managers with consistent, firm-wide positions on climate change. As well as informing internal strategy, this should mean that investee companies do not receive mixed messages from sustainability, stewardship and portfolio management teams when it comes to decarbonisation expectations.
Mokry complained of “large discrepancies between managers” when it came to engaging and voting on climate change issues, with some having sophisticated tracking and communication systems, while others offer only “very generic answers” to clients.
“We are hoping to see an increased link to investment decisions,” she noted, adding that there would be a sharper focus on engagement activities in Kenfo’s future annual reviews of asset managers.
The comments were made during a discussion hosted by the UN-backed Net Zero Asset Owner Alliance.
Other speakers echoed Mokry’s points, complaining about muddled messaging from asset managers about their climate voting and engagement activities.
Samantha Chew, stewardship lead at £200bn Aegon UK, explained that a review of its key managers highlighted that “voting is sometimes inconsistent, and it’s very hard for an asset owner to understand” because the rationales “are often bundled up, or generic, or lacking links to the engagement undertaken by the asset manager itself”.
Her colleague Hilkka Komulainen, who heads Aegon UK’s responsible investment activities, said there was “a disconnect” between the volume of ESG activity being undertaken by some asset managers, and the level of change in the real economy.
“We see high volumes of individual engagements organised; we see high volumes of companies being engaged; reports; events; papers; but this doesn’t connect back into the progress that’s been made to mitigate climate change and the progress towards a low-carbon economy,” she argued.
Kalina Lazarova, governance and voting lead at Phoenix Group, described managers’ escalation strategies – used when companies don’t respond satisfactorily to engagement requests – as “rather mixed”.
Some have “a developed and systematic approach” she continued, pointing to those that automatically vote against directors when they want to escalate. “At the other end of the spectrum, we observe others where climate change is not a systematic consideration in voting.”
All the asset owners called for asset managers to more closely connect stewardship and voting activities with investment decisions and portfolio management teams.
Read the digital edition of IPE’s latest magazine
No comments yet