Thursday 22 August 2019

Funds hit out over disclosure proposals

Allianz Global Investors were also among those warning overly prescriptive rules could weaken their impact. Photo: Miguel Villagran/Getty Images
Allianz Global Investors were also among those warning overly prescriptive rules could weaken their impact. Photo: Miguel Villagran/Getty Images

Simon Jessop and Sinead Cruise

Some of Britain's biggest asset managers are protesting against proposals that they disclose more details about their discussions with company boards on issues such as climate change and child labour.

The Financial Reporting Council (FRC), which sets best practice for funds' oversight of the firms they invest in, wants managers to be more open about how they tackle environmental, social and governance (ESG) issues. But some of the biggest money managers argue too much disclosure could damage efforts to change corporate behaviour.

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"There is ... a coherent distinction between what can reasonably be made public without undermining the trust on which the engagement is based, and what is best kept private between parties in order to best promote change," BlackRock said in its response to the FRC's proposals.

The FRC wants signatories to give more details about meetings on ESG issues and produce an annual report on their efforts. The move follows criticism of the FRC that suggested its code could be ditched if it's not toughened.

For managers it is an important issue, given signing up to the code can be a crucial part of winning investment mandates as more investors seek ethical assurances.

Allianz Global Investors, were also among those warning overly prescriptive rules could weaken their impact, particularly if funds focus on short-term engagement wins at the expense of longer-term efforts that deliver greater shareholder value.

Reuters

Irish Independent

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