Peers help secure new reporting requirements to boost transparency on managing climate and nature risk

Last year as part of the Digital Markets, Competition and Consumers Bill, cross-party P4P Peers made the case for a very specific and practical change to improve consumer rights: having visibility as to how the rights that come with our savings are being used.

When pension schemes or other savers invest in company shares, these confer rights to vote at the AGMs of those companies and any resolutions tabled by shareholders - for example, in relation to reporting climate risk and setting decarbonisation targets. Normally these voting rights are exercised on savers’ and pension schemes’ behalf by their investment managers.

The amendment proposed last spring, led by Baroness Wheatcroft and supported across the parties, sought to ensure every investor, big or small, can get access to standardised comprehensive information from these investment managers on how they cast votes on their behalf at these company AGMs.

This change was needed because the existing arrangements meant that investment managers had no obligation to report votes within a fixed timescale, could exclude votes they deem insignificant, and report in a wide variety of formats, making it extremely difficult for pension schemes and savers to identify votes on their own shares.

Since then, Peers have consistently made the case to bring forward these changes with the government and industry regulators, including via similar amendments during the passage of the Financial Services and Markets Act 2023. This persistence has now paid off, with the pensions trade body and the FCA-established Vote Reporting Group publishing a template and technical guidance to support the collection of voting information from investment managers in a standardised format.

Securing voting transparency in this way means that pension schemes will be prompted to move their savers' money from investment managers who only 'talk the talk' on climate-and nature-related AGM voting, to those who actually 'walk the walk'.

This will help increase the proportion of assets which are sustainably managed. It will also mean that individual engaged savers will be able to find out how their investments were voted, and pressure their pension scheme to take a stronger line.

This long overdue change to reporting requirements, which has been required in the USA for over 20 years, will apply to investment managers with responsibility for more than £6.6 trillion of assets.

It will provide much needed transparency and provide pension schemes with a key measure to compare performance of investment firms on managing climate and nature risk, and to fulfil their fiduciary duty in ensuring that votes are exercised in savers’ best interests.

The new Vote Reporting Template and accompanying technical guidance to support users is available here