Stewardship Code report shows investors committed but room for improvement

The report highlights that respondents increased the human resource dedicated to engagement by 19 per cent in the year to 30 September 2014. Furthermore, over 80 per cent of this increased resource is represented by portfolio managers and analysts - indicating a welcome increase in the integration of stewardship into the investment process. 

Almost 90 per cent of respondents are satisfied with the outcome of their engagement with the companies in which they invest. They welcomed companies' responsiveness and openness to dialogue, alongside their ability to effect change. 

Respondents indicated that direct contact and one-to-one meetings are the most effective ways of engaging with investee companies. The report also shows that collective engagement is vital in certain circumstances, in order to attain critical mass, allow smaller investors access to companies and effect change. However, the effectiveness of collective engagement can be compromised where there is no consensus on the course of action. 

Liz Murrall, Director of Stewardship Reporting, said: 

"Investor engagement can help ensure long-term and sustainable strategies at companies and deliver good long-term returns to our clients and end beneficiaries. 

"It is encouraging to see that firms are devoting greater portfolio manager and analyst resource to engagement, illustrating that stewardship is moving to the heart of the investment process."

 Other key findings show:

• An increase in the response rate to 45 per cent - the highest in three years.

• A stable proportion of respondents - 78 per cent - conduct all or some engagement in-house.

• There is more engagement with overseas equities but less with other asset classes.

• A significant increase in voting activity with 84 per cent voting all shares in UK companies.

• A decrease in respondents that notify companies in advance of intention to vote against or abstain.