Around a third of fund management firms, including Schroders (LSE:SDR) PLC and JP Morgan Asset Management, have missed out on inclusion in a new 'greenwashing' code for the industry, which was announced by UK financial regulators today.
The Financial Reporting Council published the list of 125 signatories of its new, tougher UK Stewardship Code after receiving 189 applications.
To help investors work out if fund managers are truly walking the walk on stewardship issues such as environmental, social and governance (ESG) factors, the revised code requires asset managers to not only spell out their actions in selecting investments, such as meetings with companies and voting at annual meetings, but also to provide evidence on the outcomes of those actions.
The FRC said 64 of the 189 asset managers that applied, failed to make the grade, often because of relying “too heavily on policy statements” and an inability to provide proper evidence on these outcomes.
The watchdog said it carried out a "rigorous review process" that considered organisations' investment styles, sizes and types, and was "pleased to see investors better integrating stewardship, and environmental, social and governance (ESG) factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts".
Firms on the full list of signatories include Abrdn, Aviva, Baillie Gifford (manager of Scottish Mortgage Investment Trust PLC (LSE:SMT) and many others), BlackRock (NYSE:BLK), Fidelity, Invesco (NYSE:IVZ), Legal & General, M&G and Vanguard, as well as asset owners such as the BT pension fund.
Schroders (LSE:SDR) expressed frustration at not being on the list, saying feedback from the FRC indicated it was due to issues with the format of its submission. "We are confident we will be a signatory again soon," Schroders (LSE:SDR) said.
Under the new code's comply-or-explain basis, firms must say publicly why they are not applying it.
The next opportunities for firms to apply are October this year and next April.