Responsible for half a trillion pounds of assets

The Association of Member Nominated Trustees is celebrating passing a major milestone. In the last few weeks after an increasing influx of new members the organisation’s membership has passed 500 – and the total assets under management of our members’ pension schemes is now more than half a trillion pounds.

For an organisation run by and for member nominated trustees and set up less than five years ago, this is a major achievement. Its growth in members and in influence clearly demonstrates that member nominated trustees have an extremely important and indeed unique role to play.

One of the reasons for this increase in membership is undoubtedly the interest in AMNT’s Red Line Voting project. On 24th June the AMNT’s membership at our summer conference endorsed our Red Lines and voted them into existence. AMNT is now working to launch Red Line Voting in October.

Red Line Voting is a solution to the problem faced by trustees of small and medium sized schemes in fulfilling their fiduciary duty with regard to their scheme’s investments. There has been growing pressure on trustees to adopt policies on responsible investment and play an active role in the stewardship of the assets that they hold. Yet many small schemes are told that they are too small to do so, and the majority of pension schemes invest in pooled funds whose managers are reluctant to allow the investors to direct how their votes should be cast at corporate meetings. But trustees know that there is growing demand from their members to report how their votes have been cast: some are facing Freedom of Information Act requests.

So we have developed Red Line Voting, in consultation with the fund managers and other members of the UK Sustainable Investment and Finance Association. We have put together a series of “Red Lines” – tightly drawn voting instructions – covering not only corporate governance but also environmental and social issues. Pension schemes are invited to adopt all or some of the Red Lines and instruct their fund managers to engage and vote according to them. They are at liberty to vote contrary to a Red Line if they judge that to be the best course of action, but if they do they are required to explain to their client why they did so.

This gets round the problem of directing votes on pooled funds: fund managers may receive Red Line Voting instructions from several pension schemes – but they are all the same instructions, so the votes can be aggregated. Our talks over the last few months around the City have given us the confidence that Red Line Voting will work.

We are delighted at the response of our members to this project. Our recent survey of our members revealed that in their view climate change is second only to political and regulatory instability as the biggest threat to scheme members – yet there was no simple, ready made climate change policy that they could adopt.

Well there is now. AMNT worked extremely closely with CDP – the internationally renowned Carbon Disclosure Project – to formulate our environmental Red Lines and they have climate change at their heart, and CDP has called on pension schemes to adopt our Red Lines. International interest is growing exponentially and AMNT has been invited to speak about it internationally. This includes addressing the World Pensions Forum in Paris in December which takes place alongside the UN conference on climate change.

We are delighted that Red Line Voting has been described as “a major advancement in longterm capital stewardship in the world’s second largest pension market, sending a strong message in favor of ‘greening’ and more forceful investment governance.” We know that it has already been put on the agendas of upcoming pension scheme board meetings even in advance of launch. Any trustees who would like more information on the project, and any pensions professionals who would like to join with AMNT and UKSIF in taking it forward, should please get in touch.

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