Fortnightly News Blog – 20 April 2021

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Diversity in Asset Management

The benefits of diversity in an investment portfolio are well known, but the advantages of having a diverse workforce are still the subject of much discussion – despite most evidence showing more diversity is good for business.

Larry Fink, CEO of the world’s largest asset manager BlackRock, is all too aware of this and has pledged to be more assertive on diversity and inclusion efforts in its workforce. In an interview with the Harvard Business Review, cited by Bloomberg, he said admitted the company wasn’t “moving as fast as I wanted”.

He’s not alone: former Schroders chief operating officer Markus Ruetimann called on asset managers to embrace diversity in the workforce to bolster their IT and data analysis capabilities, as Funds Europe reports.

The Securities and Exchange Commission is considering diversity disclosure rules for the boards of listed companies in the US. In this BoardIQ article (subscription required), author Greg Saitz explores how some boards are already disclosing diversity data and what challenges and benefits this brings.

The ‘How To’ Guide to ESG

The ‘E’ of ESG remains the biggest topic for many commentators and investors. Jonathan Boyd writes on the theme of net zero carbon emissions for Investment Week, looking at how investors can understand and achieve this complex goal.

Following the introduction of the Sustainable Finance Disclosure Regulation (SFDR) across the European Union, analysts at Morningstar have been working to understand which funds fall into each of the three categories introduced by the new rules.

Investment Week details that just over 21% of the funds the data provider had reviewed so far were classified under article 8 or 9, also known as ‘light green’ or ‘dark green’ funds.

Another Investment Week article, by Kavitha Ramachandran of consultancy Maitland, goes into detail of greenwashing and how to avoid it – something that is going to become ever more important for fund boards to consider.

Too Big to Fail?

Remember when banks were deemed “too big to fail”? Now it seems that investment funds could receive similar systemically important status. According to the Financial Stability Board (FSB), while banks have broadly improved since the financial crisis, the “shift of credit intermediation to non-bank financial intermediaries should continue to be closely monitored”.

The FSB’s full report is available here, with the relevant text on page 60.

UK regulators are also eyeing investment fund resilience, according to Funds Europe. A policy statement (PS21/3) jointly issued by the FCA, the Prudential Regulation Authority and the Bank of England sets a 31st March 2022 deadline for companies to be able to identify vulnerabilities in their operational resilience.

In Ireland, a consultation has been launched with a similar focus on resilience across financial services. It contains proposed new requirements for outsourcing arrangements to protect against outages and adverse events.

AoV Pushback

Speaking of ‘failures’, Sunday Times money editor James Coney has written a scathing editorial taking aim at the investment industry for lacking accountability. He cites several AoV reports and questions their output.

Investment managers have also been questioning the output of some value assessments, reports Ignites Europe (subscription required). Some managers apparently feel hard done by from the feedback from their ACDs.

Another Ignites Europe report puts the FCA firmly in the spotlight, highlighting the lack of guidance, feedback or frameworks for the assessment of value process. ESG, governance, regulation, and AoV will all be covered at this week’s iNED Bootcamp. There’s still time to register to access the week-long multimedia event – visit our dedicated site now.

FBC takes no responsibility for the accuracy or quality of the news in the links provided above, and nor are the views and comments representative of FBC or its members, unless expressly stated. In some instances, as indicated, a subscription is required to access certain news articles, and content stored on the FBC portal is freely accessible for FBC members.