12 Oct 2020
Active managers have long claimed that only they have the strength of voice needed to encourage companies to make changes. We don’t share that view.
Passive managers hold a far higher share of companies’ equity than ever before. As a result, indexed investors like Lyxor ETF have more ability and more responsibility to speak up and promote sustainable investing practices in the goal of increasing investor returns. It’s a duty Lyxor Asset Management’s Socially Responsible Investment team led by Florent Deixonne welcome.
In our view, index-based investing will be a key factor in helping to finance a greener economy for two reasons:
We are invested in portfolio companies for as long as they are part of a relevant index. Rises or falls of an individual stock are therefore of no consequence — it is ultimately the tracking of the overall index that matters. In contrast, choosing to vote for a resolution which may help speed the transition to a more sustainable economy, but could hurt an individual company’s share price in the short term, can be a tough task for an active manager to take on. This is not to pit active against passive when it comes to voting, but only to stress that voting can be just as potent a tool in the hands of passive managers.
We have no axe to grind in this debate as we offer both products. As one of Europe’s largest ETF providers, and a responsible shareholder, we have a strong and active voice and regularly use our vote to make a difference for our clients. The inevitable growth of the ETF market will see that voice strengthen further and we will do everything in our power to help finance a greener economy and limit global warming to 1.5°C.
So how do we go about being a responsible shareholder? Our shareholder engagement policy has the answers. Our voting policy:
Our shareholder engagement policy meanwhile is reviewed annually to take into account legal developments and any changes in corporate governance codes and market practices that may have occurred throughout the year.