If voting changed anything…

It’s that time again when the battle lines are drawn, opposing camps martial their arguments against each other and people are forced to choose who gets their vote.
We’re talking, of course, about voting in pooled funds. Last week saw the Association of Member Nominated Trustees (AMNT) reiterate its call for this issue to be tackled by regulators. We wholeheartedly agree. The status quo is a corporate governance rotten borough. An unrepresentative electorate commands the vast bulk of the voting power. It’s time for reform.
We know from our own analysis of both manager voting and clients’ ESG policies that there can be huge differences in opinion. Currently, asset owners are being forced to use their assets to support policies they disagree with. This is particularly problematic for the pension funds of organisations with strong institutional beliefs, which are therefore shared by their beneficiaries, that they seek to give expression through voting and engagement. By refusing to allow these schemes to vote as they wish asset managers are forcing asset owners to override the views of beneficiaries. This seems to be in direct conflict with the expectations of the latest DWP guidance.
It is not good enough for the industry to say that investors must choose to invest through segregated mandates if they want to vote. We know there is no technical barrier to voting in pooled funds, since some managers facilitate it. So this is simply a refusal to facilitate client requests. As more money pours into pooled passive funds the bigger the problem gets. And how can we take claims of a fintech revolution seriously when managers claim they cannot find a technical solution to this problem?
The suspicion is that asset managers want to retain the influence that really belongs to their clients. In that sense they are cut from the same cloth as the landowners of the 19th century who resisted the enfranchisement of the general public. In an age of growing societal expectations of both companies and investors we can no longer allow vested interests to stifle the voices of those whose hard-earned savings are at risk.
It’s time to democratise shareholder voting!

Leave a Reply

Your e-mail address will not be published. Required fields are marked *