Fund managers slammed for not promoting diversity

There's a reluctance to adopt specific shareholder voting guidelines that promote some 'ESG' causes. 

Anyone following investment funds would be given for thinking that almost the entire industry has adopted ESG, or environmental, social, governance principles.

However, according to research by the Association of Member Nominated Trustees (AMNT), most fund managers are reluctant to adopt specific shareholder voting guidelines that promote certain ESG "causes".  

Released alongside a formal complaint to the Financial Conduct Authority, the AMNT's report looked at whether its four Red Line policies – on climate change, women on boards, ethnic diversity and executive pay – were reflected in the voting policies of 42 fund managers.

The report found that of the 38% of respondents that disclosed a voting policy, half did not have a climate change-related policy. This, the AMNT said, suggested that many fund managers were not taking the issue of climate change seriously enough.

When it came to gender diversity on boards, 70% of the managers that disclosed voting guidelines made mention of the issue. On the ethnic diversity of boards, nearly 75% of fund managers that reported guidelines made no specific mention of ethnicity with regards to board diversity and only around 10% had any voting guidelines on the issue.

According to the AMNT guidelines, fund managers should adopt policies committing them to taking into consideration gender and ethnicity when voting on board appointments.

In regard to executive pay, of the 25% that published their policy on the topic, only a few had voting guidelines on tackling excessive total remuneration in some form.

The review also pointed out that many of these policies were characterised by ambiguous language. The AMNT wants to see fund managers adopt more stringent voting guidelines.

The finding prompted Guy Opperman, minister for pensions and financial inclusion to weigh in, claiming:

"It's utterly unacceptable that most pension fund managers don't have published policies and practices to combat climate change, and public commitments to tackle excessive pay and promote gender and ethnic diversity are all too rare."

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