Fund managers are beginning to act like responsible business owners
There are signs that the world’s big shareholders are finally grasping that, as the technical owners of listed companies, they have long-term financial and social responsibilities, says Merryn Somerset Webb.
Are the world's big shareholders finally grasping that, as the technical owners of listed companies, they have long-term financial and social responsibilities? There are a few signs.
You can see it starting in the pay protests across the sector. And you can see it in the regular divestment from fossil-fuel firms (more for fear they will be hit hard financially by climate change related legislation than anything else, I suspect). But there's something more interesting afoot outside the longstanding rows about pay and oil.
A coalition of 71 investors overseeing more than $2trn in assets has put out a warning abut antibiotic use by ten giant food companies (including Dennys, Greene King, Whitbread and the Cheesecake Factory). The idea is to try and persuade them to work to prevent the routine use of antibiotics by meat and chicken suppliers so as to cut the risk of full antibiotic resistance in humans.
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This is excellent news. That's partly because the risk is high, and anything done to deal with it is good, but also because the fund management companies in question they include Aviva, Boston Common and Coller Capital are finally showing that they are thinking long term.
They recognise that antibiotic failure, could have huge effects on global health but also that government attempts to prevent it if the private sector doesn't get there first, could have huge effects on company profits and hence "truly frightening" effects on their client's long term wealth.
There is, said Lauren Compere, of Boston Common in the FT, "a financial risk linking to companies not anticipating (regulatory changes). As long-term investors, we have a to think about the risk the companies face."
In a perfect world, fund managers would always have been thinking like this. They haven't been. Perhaps this is a small starter of a sign they are beginning to get it.
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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