The PRI today welcomed the launch of Australia’s first compulsory asset stewardship code for fund managers by the Financial Services Council (FSC).
The Internal Governance and Asset Stewardship Standard, which will be mandatory for all of the FSC’s fund manager members, formalises a code of practice for how they should meet obligations for transparency within their internal governance and stewardship practices. This includes rules for how they disclose their voting policies and engage with investee companies on material environmental, social and governance (ESG) issues.
The development of an Australian stewardship code was one of several recommendations put forward by the PRI in its Australia roadmap in December 2016 to enhance investment industry policy and practice on responsible investment and bring these into line with global best practice. Stewardship standards have already been developed in many markets in recent years, including the UK, US, Japan, Hong Kong, South Korea, Malaysia, Brazil and Singapore. The PRI’s Principle 2 states: We will be active owners and incorporate ESG issues into our ownership policies and practices.
The recommendations outlined in the roadmap, which was supported by UNEP FI and The Generation Foundation and developed in close collaboration with the Australian Council of Superannuation Investors (ACSI), the PRI’s Australian signatories, policy makers and lawyers, will allow a fiduciary to fully integrate ESG risks.
The PRI believes that asset owners and investment managers should be effective stewards of the assets they hold for their beneficiaries. Asset owners should appoint, select and monitor asset managers on their ability to align stewardship activities with their investment beliefs, policies and guidelines, and the PRI will continue to work with its Australian asset owner signatories to support them to do this. Ultimately, the PRI believes an industry-wide stewardship code covering both asset owners and managers should be developed by the industry.