Some of the world’s best-known asset managers, many of which are used by charities, often side with company management on controversial votes even when there is a strong case for challenging the company’s position, according to a report published today by the responsible investment charity ShareAction.
Researchers for the report, Asset Manager Voting Practices: In Whose Interests? looked at the records of the largest 33 UK asset managers on a range of votes made at annual general meetings in 2014.
These included votes at the AGMs of the pharmaceutical companies AstraZeneca and Reckitt Benckiser and the energy firm ExxonMobil.
The report says that asset managers should have voting practices that enable them to act in the best interests of their clients.
"This research reveals significant variation in the voting decisions and disclosure of the UK’s 33 largest asset managers," it says. "Variation in voting decisions is to be expected, as different managers will have different priorities and operate in different ways according to their clients’ needs and their investment style.
"However, we find that a number of asset managers consistently support company management’s recommendations when voting, despite apparent problems with the proposed resolution."
Catherine Howarth, chief executive of ShareAction, said she expected investors would be asking tough questions of their asset managers as a result of this report.
"Most of us investing with big-name asset managers trust them to vote sensibly on a host of controversial issues at the annual general meetings of the companies we own," she said.
"But our survey suggests a wide range of big names in asset management aren’t exercising their stewardship responsibilities at some of the world’s biggest companies.
"Investors should on the whole support company management. However, they should be willing to vote against management’s voting recommendations to protect the long-term interests of their clients and their beneficiaries."