Some of the UK’s biggest names in investment have failed to meet a new ESG standard for investing for savers and pensioners, including Schroders, Morgan Stanley and Rothschild.
In a new list published by The Financial Reporting Council (FRC) today, asset managers, pension schemes and insurers who successfully met a revised UK stewardship code were revealed.
To make it as a signatory on the list, these investment houses successfully explained how they were creating “long-term value for clients and beneficiaries leading to sustainable benefits for the economy”.
But of the 189 companies with a combined £32tn assets under management that applied for the new standard, only a third were approved.
Three of the UK’s most prominent investment giants – Schroders, Morgan Stanley Investment Management, and Rothschild Wealth Management – didn’t make the cut.
Of those missed off the new list, most were demoted from previously having been signatories – which had required them just to write a policy statement about their stewardship that met criteria.
But for the first time this year, investment houses had to provide detailed evidence of how their activities complied with the FRC’s new code, comprising 12 principles.
These included showing how they exercised rights for listed equity assets, and demonstrating how they “systemically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities.”
For those who didn’t make the list, the FRC will “encourage those who have been unsuccessful to reflect on our feedback and apply again in future,” said chief executive Sir Jon Thompson.
Investment houses selling ESG funds and managing other assets will likely face pressure to explain to clients why they have not made it on the list.
About 125, or two thirds, of applicants successfully made it on the list, including Abrdn, JO Hambro Capital Management, Fidelity International and Legal & General Investment Management.