A high degree of transparency and reporting is the most important indicator of effective equity investor stewardship, a survey conducted by First State Investments at its annual Responsible Investment and Stewardship Forum found.
The Forum, attended by asset managers, asset owners and pension funds, also marked the launch of First State’s seventh Annual Responsible Investment and Stewardship Report.
First State’s chief executive officer Mark Lazberger and First State’s global head of responsible investment Will Oulton were accompanied by industry experts such as McKinsey global managing director Dominic Barton to lead a discussion on the role of RI and stewardship within the asset management industry.
On how First State is responding to this Lazberger says: “We believe it’s important to share with our clients and also our peers how we are attempting to address the many RI challenges that arise in our day-to-day activities. It is through reporting, such as the Annual Responsible Investment and Stewardship Report we are launching today, that we hope our industry can move forward together to enhance the effectiveness of RI implementation for the ultimate benefit of our clients.”
How to assess and incentivise long term performance was a key theme at the event. Asset managers' investment performance metrics are not, according to the research, reflective of effective long term investment time frames. This was evident when 33 per cent of the audience supported a three to five year rolling average benchmark index for the best measurement of investment performance.
When asked what would best enhance the effectiveness of engagement, 32 per cent voted for better alignment with investment performance with just eight per cent feeling that voting against management was the best form of action.
Another key finding was that an increasing focus on ESG integration by asset managers is influenced by strong mandates from asset owners and the requirement for better long term reporting.
Oulton shared how stewardship is a key theme across all investment teams at First State and how the firm is using ESG data to support the investment professionals.
“We have a number of investment teams, across a wide range of asset classes and geographies that each have their own unique investment process. The common thread which exists between them all is a commitment to achieving the highest standards of stewardship. All our investment teams seek to understand and integrate ESG factors into their unique investment processes to enhance the quality of their investment decisions,” says Oulton.
