A stewardship chief from the UK’s largest retirement fund has warned against the risk of watering down the ability of asset managers to engage in “collaborative” engagement with boards.

Valeria Piani, head of stewardship in the sustainable investing team at Phoenix Group, managers of £230bn in savings, was speaking amid concerns that statements made by regulators could undermine collaborative engagement—the process by which a single body would speak on behalf of many asset managers on key topics. She also said there were signs asset managers were pulling away collaborative engagement.

Piani, appearing at an investment stewardship event run by the International Corporate Governance Network (ICGN), said she was “concerned” about a “sentiment that collaboration is the wrong thing” in the current investment landscape.

She said there were indications that some asset managers had given up on collaborative engagement, arguing they had learned themselves how to engage on hot-button topics.

“If we go back to being totally scattered…I don’t think we’re achieving the goal of more long-term sustainable performance,” Piani said.

The UK’s stewardship code is currently under review by the Financial Reporting Council (FRC), but interim statements from the regulator have left some concerned that “collaborative” engagement had been depicted as an escalation tool of last resort.

‘Facilitate transparency’

Others have revealed concerns about the FRC statement. Laith Cahill, a stewardship expert with IIGCC, said in a blog: “From our perspective, collaboration is invaluable in its ability to facilitate transparency between investor and company.”

The consultation was also targeted last week by the Capital Markets and Industry Taskforce (CMIT), a City lobby group, which published an open letter calling on the FRC to switch the stewardship code from an “apply and explain” model to a “comply or explain” basis.

CMIT also said that a revamped code should do away with suggesting the need for “demonstrations of systemic stewardship”, and reduce reporting.

There is much support among investment managers for a reduced reporting burden under the code, though some have questioned whether the code can be stripped down and still retain its original purpose.

At the ICGN event, there was a focus on expectations from asset managers by asset owners. There was some concern that asset managers may be taking too long to pressure boards and companies through their engagement.

Vaishnavi Ravishankar, head of stewardship at the £30bn Brunel Pension Partnership, said asset owners were becoming “tired” of a “slowly, slowly” approach to boards by asset managers.

“You can’t say you’ve been engaging with this company for five years, we’re seeing no progress, we continue to engage. What does that really do?” said Ravishankar.

The FRC is expected to launch a consultation on the stewardship code this autumn, with a finalised version to be published early next year.