Stockholm (NordSIP) – The Institutional Investors Group on Climate Change (IIGCC) is a powerful body for investor collaboration, gathering more than 350 members, mainly pension funds and asset managers, across 23 countries, with over EUR 51 trillion in assets under management. To assist its members, IIGCC has recently been working on making the guidelines for assessing the climate stewardship of their external managers clearer and more useful.
The project was triggered by the realisation that asset owner members find it challenging to assess, understand and monitor their managers’ stewardship on climate. While asset owners can and do engage directly with portfolio companies, many rely on external managers to implement engagement strategies. In this context, the alignment between asset owner and manager is critical to achieving net zero targets. However, aligning asset owner targets and expectations with asset manager stewardship practices can be challenging.
To get to the heart of the matter, IIGCC set up a working group of asset owners. For a while now, they have been developing some supplementary guidance to the Net Zero Stewardship Toolkit to address the challenges with alignment and transparency between investors. Their work has resulted in a new questionnaire that should make it easier for asset owners, as well as investment consultants and asset managers, to integrate climate stewardship data into the selection, appointment, and monitoring process. It primarily builds on the IIGCC Net Zero Stewardship Toolkit but also seeks to align with existing work to promote consistency in due diligence and reporting. The main aim is to support investors in meeting expectations under the Net Zero Asset Managers and Paris Aligned Asset Owner initiatives.
The questionnaire can be incorporated into existing manager selection, appointment, and monitoring processes. Relevant parts can be used by different organisations and for various investment mandates. It has been developed to apply to listed equity but can be used for other asset classes, and questions can be answered overall or by asset class. Currently, the IIGCC is developing more specific asset class guidance.
The proposed guidance is now open for consultation until 28 February 2023, and the IIGCC welcomes feedback, particularly from asset owners, asset managers and investment consultants, to ensure the final guidance is widely applicable.
One of the asset owner representatives who has been actively involved in the project is Emma Henningsson, responsible for Active Ownership at Sjunde AP-fonden, AP7. “It has been a pleasure contributing to the asset owner working group, striving for streamlined and consistent requests on asset manager reporting,” she comments. “Please take a look and provide your feedback!” urges Henningsson.
