In Romania we have a saying: when there is an issue the Government establishes a working group and the working group ‘kills’ the initial issue creating other problems.
UK has started a new project proposing a standardization of the vote reporting for asset managers. In November 2022, the Financial Conduct Authority established an independent working group to build an industry position for a voluntary comprehensive vote reporting template for UK asset managers. The working group reached a consensus, and the proposal was published in late June 2023. The proposal for vote reporting is in public consultation and the deadline to send responses for the consultation paper is 21 September 2023 (https://www.fca.org.uk/publications/consultation-papers/vote-reporting).
Even though this is applicable only to UK, the history proved that the practice adopted in UK was followed sooner or later by other European countries (for instance the corporate governance principles).
Stewardship involves active oversight of assets in which they act as shareholders and where they choose to invest. These activities support the functioning of the financial markets by enhancing their quality and integrity, and contribute to sustainable, long-term value creation for several actors on the market. Good voting practices, transparency and comprehensive vote disclosures from asset managers and institutional investors are important elements for an effective stewardship.
The consultation paper published last week proposes a standard field vote reporting that includes:
- Name of the issuer
- Meeting date
- Name Meeting Type
- Country of the issuer
- Reporting identifier (LEI/ISIN/or other)
- Resolution identifier
- Resolution title
- Resolution category
- Proponent (Company/Shareholder)
- Company voting recommendation
- Vote instruction (For/Against/Abstain/Withheld)
- Standardized rationale category
- Narrative rationale
- Is the vote decision in line with the asset manager’s voting policy
- What type of engagement with the issuer is linked to the vote decision? (Collaborative engagement/Letter (bespoke)/ Letter (campaign)/Meeting with Chair and Board/Meeting with company advisors/Meeting with investor relations team/Meeting with management/None/Other/Site visit)
Many institutional investors and assets managers present in EU countries have offices in UK and the new reporting will be implemented by them in UK. The question is: it will be the standardization of the vote reporting proposed for UK applicable for countries members of EU or there will be local initiatives. And what is the additional cost for asset managers and institutional investors for implementing such vote reporting if the proposed format is not similar?