First came the flows as fund managers rush to launch fund after fund extolling their ESG credentials, and now comes the recrimination, as lobby group after think tank and research outfit cry foul. In this news report from Financial News, the University of San Diego and the non-profit sustainable-investing advocacy group As You Sow suggest that asset managers building investing ESG funds “may have a language issue”. They concluded that the “linguistic patterns found in mutual fund and ETF prospectus language they reviewed has a relatively low correlation with its ESG rating.” Oh dear! Read the report here.
Feet of clay
Asset managers signed up to initiatives such as Climate Action 100+ (CA100+) and the Net Zero Asset Managers Initiative (NZAMI) are not using their voting rights to back climate adaptations at listed firms, with members opposing a third of environmental resolutions this year, according to research. Portfolio Adviser reports on this growing issue here.
Demanding standards …
Little surprise then that industry bodies like the Association of the Investment Companies, representing listed investment trusts in the UK, are calling for “demanding standards” and greater consumer education in order to secure the success of the UK’s Sustainable Disclosure Requirements. Investment Week reports here.
… that should be harmonised
This while another industry body, the UK Sustainable Investment and Finance Association (UKSIF), also in Investment Week here, has called on the Financial Conduct Authority to carry out further work on exploring whether a single, harmonised set of sustainable investing disclosures could be feasible in practice, and argued that some issues still need to be addressed regarding the UK’s sustainable finance taxonomy.
From just before the holidays a neatly summarised set of ESG issues by Alex Edmans from the London Business School on LinkedIn here.
Terry Smith’s annual letter to shareholders has a core following, but in fairness it probably isn’t very large. Not so this year, as his exasperation with Unilever boiled over in the letter (read it in full here) as he railed against the company feeling the need to define the purpose of, in this instance, Hellmann’s mayonnaise. “The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert – salads and sandwiches),” he fulminated. Oh, how the press had a field day! Here’s Investment Week’s version, but not everyone agrees. Richard Bernstein, founder at activist fund Crystal Amber in the Financial Times here believes that Smith’s ire is misdirected. You can be the judge.
Financial Conduct Authority
A new year, a new FCA market study. The regulator says it will undertake a study looking at how competition is working between benchmarks. This study will look at issues such as how benchmarks are priced, contractual terms and barriers to switching. It plans to launch the market study in the summer and will publish more details of the scope and timetable at that time. Read the FCA’s full feedback statement FS22/1 here, and Portfolio Adviser’s reporting of it here.
The government has published plans to strengthen the rules on cryptoasset advertisements and protect consumers from misleading claims, and as a result, the promotion of qualifying cryptoassets will be subject to the FCA’s rules. Money Marketing has the report here.
Conduct and Culture
In the time-honoured tradition of CEOs being more expansive (and ‘reflective’) with the media soon after they have left/retired, T Rowe ‘Nice’s’ Bill Stromberg talks at length to the FT on the importance of firm culture, Covid fatigue, salaries and careers. There are also some salutary lessons for fund board directors, and the full report can be read here.
In Memoriam: Lord Myners
Tough and fair
City grandee and former Labour minister, Paul Myners may be remembered best for his time tackling the 2008 financial crisis. Others will remember him for the remarkable job he did at the helm of the erstwhile fund manager, Gartmore, and yet others like FBC’s Advisory Council chair, Philip Warland will remember him for being a good friend. Mr Warland says he will never forget Lord Myners interviewing a senior industry CEO at an asset management conference, where he “crucified” the CEO. “Afterwards I said he had been a bit tough, but with a ready smile he (Myners) responded that he thought he had been very fair,” recalled Mr Warland. The Guardian’s report of Lord Myners’ passing can be found here.
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