Mercer has launched a new service to assist institutional investors in meeting the requirements of the UK Stewardship Code. The service will also be extended to the EFAMA Code for External Governance and the Eumedion Best Practices for Engaged Share-Ownership. Through the new Stewardship Service, Mercer will offer a tool that allows asset owners to check whether their asset managers are compliant with the codes and a service to help investors benchmark their own investment policies against the codes’ principles. Mercer’s Stewardship Service will also support trustees with the implementation of effective stewardship into their ongoing activities and within their investment policies and documentation.
Will Oulton, Mercer’s Head of Responsible Investment for Europe, said: “There is a growing view among academics and investment professionals that environmental, social and governance (ESG) issues does affect the short and long-term performance of institutional investment portfolios. It is the duty of trustees to act in the best long-term interests of their beneficiaries and we believe that effective stewardship can be an important element in both protecting and enhancing long-term shareholder value.
“Our Stewardship Service aims to make it simple for trustees to understand and define their stewardship responsibilities and to provide them with easy-to-use tools to assist in the selection and ongoing monitoring of their asset managers.”
Mr Oulton added: “Stewardship exercised through oversight, voting and engagement activities helps the realisation of long-term shareholder value. Where companies have inactive or disengaged shareholders the chance is that much greater that company management will act in ways that are detrimental to shareholders’ interests. “
David Paterson, Head of Corporate Governance at the National Association of Pension Funds (NAPF), said: “The NAPF is a strong supporter of the Stewardship Code and therefore welcomes this initiative from Mercer. By committing to the code and holding their managers to account for their stewardship, pension funds can help raise standards of governance in the investment industry as well as at the companies in their investment portfolios. To do this effectively they need tools such as the new service from Mercer.”
The UK Stewardship Code applies in the first instance to investment managers, however the Financial Reporting Council (FRC) has stated that all institutional investors, including asset owners, need to engage actively in the process and encourages them to report if and how they have applied the code. Mercer is a signatory to the code.
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