Appendix B: Reporting to Clients - Additional Information
Appendix B: Reporting to Clients - Additional Information
This Appendix contains an illustrative list of all information that might be provided by the asset manager to the client. The content and frequency of these reports should be agreed between the client and manager and specified in the investment management agreement. Reporting will typically be on a either an annual, half-yearly or quarterly basis depending on the information requested.
The Appendix does not cover any information that the asset manager should provide outside the normal reporting cycle if a particular situation arises (for example, if the manager has concerns about an investment or there is a conflict of interest); reporting of this sort should be separately specified in the investment management agreement.
The Appendix addresses only information relating to sustainability and stewardship. Not all items on this list will be relevant to all mandates.
The Appendix identifies a number of existing global and regional reporting frameworks that might be appropriate. This list is not comprehensive, and in some jurisdictions guidance and recommended templates for reporting from asset managers to clients are available.
Links to the frameworks in this Appendix and other useful resources can be found on the ICGN website at: https://www.icgn.org/policy/icgn-guidance
Appendix B: Reporting to Clients - Additional Information
ESG reporting standards
The CFA Institute’s Global ESG Disclosure Standards for Investment Products provide a high-level framework by which asset managers can communicate to their clients information about an investment product’s consideration of ESG issues in its objectives, investment process and stewardship activities.
Sustainability
Reporting should be provided using the agreed reporting framework and sector and/or product specific SDI metrics as well as any targets or metrics related to the client’s investment objectives that are specified in the investment management agreement or other documents.
Reporting frameworks
Examples of recognised reporting frameworks that might be referred to include:
- Task Force on Climate-Related Financial Disclosures (TCFD)
- Taskforce for Nature-Related Financial Disclosure
- International Sustainability Standards Board (ISSB)
- The Value Reporting Foundation, which includes the Integrated Reporting Framework and the sector-specific SASB standards
- Climate Disclosure Standards Board (“CDSB”)
- Global Reporting Initiative Sustainability Reporting Standards (“GRI”)
- EU: Sustainable Finance Disclosure Regulation
- EU: Taxonomy for sustainable activities
- National reporting requirements (where applicable)
- Carbon Disclosure Project
- Net Zero Asset Manager Initiative
- Net Zero Asset Owner Alliance
- International Limited Partners Association (ILPA): Principles 3.0 (for private equity)
SDI metrics
Examples of metrics that might be reported on include:
- GISD Alliance Sector-Specific SDG-related Metrics for Corporate Reporting
- SDI Asset Owner Platform
- SASB standards
Stewardship
- Reports on the manager’s engagement activity with investee companies in the previous reporting period. This might include, for example, data on the number of engagements undertaken divided by region, asset class, subject matter and the type of engagement;
- Case studies describing particular engagements and their outcomes.
- Summaries of any collective engagement or industry initiatives in which the manager is a participant and any activities undertaken in the previous reporting period.
- If voting has been delegated to the manager, information on how they have voted on the client’s behalf in the previous reporting period. This should include information on:
- the number or percentage of general meetings at which the manager voted;
- an analysis of votes cast for and against;
- details of any resolutions on which they voted contrary to the client’s (or the manager’s own) voting policy and the reasons why.
- Complete voting records should be made available if requested.
- Reports on stock lending, including details of all holdings which were recalled for voting, and holdings which were on loan and not voted by the manager (covering at least the priority issues identified in the mandate).
Reporting frameworks
Examples of recognised reporting frameworks that might be referred to include:
- EU: Shareholder Rights Directive
- Some national Stewardship Codes contain specific reporting requirements
The asset manager’s culture and capabilities
- Reports on any significant changes to the manager’s governance structure – including changes in key personnel - and/or policies.
- Reports on any conflict of interest in relation to the client’s investments during the previous reporting period, and how they were managed.
- Reports on research expenditure during the previous reporting period.
- Reports on the range of counterparties used during the previous reporting period, the maximum and average exposures to each counterparty and the existing exposures at the end of the period.