In This Article:
* UK Stewardship Code overhaul triggers industry debate
* More transparency sought on private boardroom chats
* Funds say could hit efforts to improve companies, UK listings
By Simon Jessop and Sinead Cruise
LONDON, May 28 (Reuters) - Some of Britain's biggest asset managers are protesting proposals that they disclose more details about their discussions with company boards on issues such as climate change and child labour.
The Financial Reporting Council (FRC), which sets best practice for funds' oversight of the firms they invest in via the UK Stewardship Code, wants managers to be more open about how they tackle environmental, social and governance (ESG) issues.
But some of the biggest money managers argue too much disclosure could damage efforts to change corporate behaviour.
"There is ... a coherent distinction between what can reasonably be made public without undermining the trust on which the engagement is based, and what is best kept private between parties in order to best promote change," BlackRock said in its response to the FRC's proposals.
The FRC wants signatories to give more details about company meetings on ESG issues and produce an annual report on their efforts. The move follows stinging criticism of the FRC that suggested its code could be ditched if it was not toughened.
For managers it is an important issue, given signing up to the code can be a crucial part of winning investment mandates as more investors seek assurance on the ethical destination of their money.
Allianz Global Investors, part of Germany's Allianz , and Jupiter Fund Management were also among those warning overly prescriptive rules could weaken their impact, particularly if funds focus on short-term engagement wins at the expense of longer-term efforts that deliver greater shareholder value.
RISK ASSESSMENT
Funds often meet with executives to discuss a company's financial and ESG performance, outlook and strategy.
While they need to ensure no market-moving information changes hands, the insights gained can help fund managers better assess risks that can ultimately impact a stock price.
Some asset managers already produce an annual or even quarterly update on their engagements with companies, but the depth of detail varies wildly. Others produce no such report.
A Reuters analysis of disclosures from some of the world's biggest asset managers shows just a fraction of talks on issues like boardroom diversity and working conditions are published.
BlackRock, which manages around $6.5 trillion in assets and owns around 17,000 stocks, has one of the biggest engagement teams in the industry and is considered among the most open, producing quarterly public reports for each of three regions.