Moneyworks believes that fund managers have a responsibility to engage with the companies that they are investing your money in, and various fund managers do this in different degrees.
Our minimum expectation is that the fund managers exercise their votes in relation to resolutions.
With Ethical Investing, we are looking for fund managers that discuss their concerns about any 'nasty' situations involving the companies activities with the board and management. The effectiveness of this engagement will depend on the power that the fund manager has. This power will depend on the size of the shareholding, and can be increased by collaborating with other fund managers to engage with the company.
Active Engagement can be a powerful way to facilitate change (see our blog article on Nestle and Child Labour) but we need to be confident that the fund managers are actually raising the issues and have the power to ensure that they are listened to. It is easy to say that your ethical investing approach is one of Active Engagement, we ask for examples.
Some of our ethical fund managers publish information on their active engagement, by company, issue, result and follow ups - which is great to see and easy to monitor. The transparency of active engagement is continually (but slowly) improving.
When we identify that a fund manager is holding companies that have some 'nasty' behaviour, we discuss why the fund manager is holding the company. If they are holding the investment to facilitate change (and they have the power to achieve that change - even if over time), that is an acceptable reason, and part of the ethical investing approach.
A number of our fund managers produce Impact Reports annually providing information on how their active engagement and underlying investments have made an impact.