£2bn Camden Pension Fund adopts pass-through voting
The £2 billion UK local government pension fund for Camden has signed up to a pass-through voting solution, allowing it to vote directly at AGM’s.
Camden’s move to pass-through voting has been made possible by a deal between Legal and General Investment Management (LGIM) and UK-fintech Tumelo, allowing investors in pooled funds to apply their voting preferences to shareholder proposals.
Clients in pooled funds do not normally have a direct say on their proportional vote, fund managers may take their views into account but in some cases, the asset managers may not align with the preferences of their investors.
This issue has made the headlines at this year’s AGM season, with many UK asset owners in particular expressing concerns that voting patters of the asset managers they invested with were not aligned with their own responsible investment practices and net zero targets.
Rishi Madlani, Chair of Pension Committee, Camden Pension Fund, commented: “Since 1996, we have voted equities in segregated mandates with our bespoke vote policy. Yet, for pooled funds we have always been forced to accept the fund managers’ policies, which are different to our own. This has led to misalignment of voting across our portfolio and sometimes with our own responsible investment beliefs.
“That’s why we are proud to be among the first to use pass-through voting on pooled funds. We can now ensure Camden has one, strong voice in the market on the most important issues for the scheme and its members, such as curbing CEO remuneration and combatting the climate crisis. We hope our decision will inspire other LGPS funds to embrace pass-through voting to drive alignment across third-party fund managers, maximise the strength of their voice, and ultimately ensure good stewardship is at the heart of their investment process.”
Georgia Stewart, CEO of Tumelo added: “Particularly for institutional investors like pension funds, stewardship is absolutely vital and our technology helps them exercise the pooled voting power they have to make a real difference on behalf of their members.”
LGIM and Tumelo have previously collaborated by offering LGIM members a service to see which companies they hold as part of their pension plan.
However, the current deal on pass through voting could potentially have wider implication for UK stewardship practices, particularly for the LGPS, with many partner funds having previously expressed interest in having a more active say on stewardship.
The deal will also be followed with great interest in the UK’s rapidly growing master trust market, where LGIM fund range frequently features in default portfolios.
BlackRock is offering a similar split voting choice service, which has been adopted among others by Scottish Widows.
Similarly, German asset manager DWS has rolled out a split voting service with Minerva Analytics.