This questionnaire supports more consistent, transparent and quality relationships between asset owners and asset managers when exercising external climate-related stewardship responsibilities and reporting on climate engagement.
It sets out best practices for incorporating climate stewardship into the selection, appointment, and monitoring of external asset managers.
It is designed to be used internally by asset owners to help meet their own specific net zero goals, offering qualitative questions for due diligence during selection, and quantitative reporting tools to support monitoring of asset managers.
“Over 73% of our UK customers consider climate risk to be an important risk when Investing,” Samantha Chew, Stewardship Lead at Aegon UK and member of the asset owner working group explained: “And savers’ pension pots are at risk If investors do not adequately manage financially material climate risks. However, right now the industry does not have an effective way to assess the quality of net zero stewardship.”
Asset owners who opt to use the questionnaire are encouraged to adopt it in full. This should help to enable a more consistent approach to the measurement of stewardship and engagement and promote better data collection by asset managers.
That being said, it can also be adapted into asset owners’ existing selection and monitoring processes in whichever way they find most useful and appropriate.
The questionnaire was produced by IIGCC’s asset owner working group with representatives from 10 organisations. In the process, IIGCC also engaged with members of the stewardship regulators group who are more closely involved with stewardship policy and regulation and the Investment Consultants Sustainability Working Group (ICSWG).
Following collaboration with the ICSWG, the questionnaire has also been designed to support integration with the ICSWG Engagement Reporting Template, with the intention of standardising its adoption across the asset owner and asset manager community.
In total, more than 50 stakeholders contributed, including asset owners, asset managers, investment consultants and regulators.
We hope that it helps both parties to better understand the process and objectives of the other when engaging with assets on their decarbonisation strategies. It can support existing relationships by improving information flows, helping asset owners and asset managers to meet net zero commitments and regulatory requirements.
Explaining the importance of the asset owner-to-asset manager relationship and the reasoning behind this new resource, Stephanie Pfeifer, IIGCC CEO said:
“While asset owners can and do engage directly with portfolio companies, many enlist asset managers to implement engagement strategies. Given that effective engagement with companies is the primary tool that investors have to progress real world emissions reductions and meet their own net zero goals, it is vital for asset owners to have visibility over the extent to which externally appointed asset managers are engaging companies in line with their climate-related objectives.
“Overall, the guidance will be a valuable tool for asset owners to use to pursue their own climate-related goals.”