City Hive’s Stewardship Council of fund gatekeepers, who jointly oversee £2trn in assets, has set a target of 50 signatories to the ACT Framework by the end of 2024 in order to drive forward an inclusive, diverse and equitable culture within investment management.

On the second birthday of ACT - an industry standard that stands for Action, Challenge and Transparency - members of the Stewardship Council have announced they will be engaging with their asset manager partners on reporting and becoming a signatory to ACT to drive firms’ progress and results over time. They are targeting an additional 33 signatories to the current 17 by the end of the year to ensure the investment management industry is authentic and truly committed in their pledges to diversity, Consumer Duty and evidencing their sustainability claims.

City Hive launched the ACT Standard of corporate culture in May 2022 to capture the essence of an investment management company’s ‘heart and soul’ and provide professional investors with a framework to assess, measure and be a catalyst for change.

Developed with and for the investment industry, it recognises that creating a positive culture of inclusion is intrinsic to creating sustainable growth and tangible outcomes for clients.

For professional fund investors, ACT improves decision making by quantifying subjective data, improving understanding of a firm and providing comparable data that supports enhanced decision analysis.

ACT is a disclosure framework providing a standardised way for investment companies to understand, create and progress cultural change - and be able to communicate progress effectively via reporting.

Each of the pillars is designed to give an oversight into how a company is integrating a strategic approach to developing its culture to ensure an inclusive, diverse and equitable environment that enables sustainable progression. The framework components enable firms to disclose where they’re currently at and use joined-up thinking to take the relevant action needed.

Since launch, 17 investment firms have become signatories (for a full list please see notes below).

The Stewardship Council consists of 25 fund gatekeepers (visit website for the full list of names) from across the industry and it is responsible for ensuring the ACT Standard is calibrated to achievable industry practice and for providing oversight of the evolution of the Framework’s maturity to drive firms' progress and results over time.

As City Hive celebrates the 2nd Birthday of ACT at an event today hosted by signatory M&G Investments in London, City Hive co-CEO Bev Shah commented on the Stewardship Council’s new target: “The ACT Standard is a symbol of trust. It is an assurance to the consumer that the values of the organisation managing their investments are aligned with their behaviours. The disclosure framework provides a standardised way for investment companies to understand, create and progress cultural change - and be able to communicate progress effectively via reporting.

“Although it is a voluntary framework and firms are not required to complete it, it supports a firm’s compliance with other mandatory regulatory obligations, specifically under SMRC and Consumer Duty as well as the FCA's D&I proposals and FCA's UK ESG rules.

“We are delighted the Stewardship Council is seeing value in the Standard and are pushing for transparency around the issue of corporate culture at their asset management partners. It is with moves like this that the investment industry can build trust with consumers again.”

City Hive co-CEO Mandy Kirby said: “It's so encouraging the Stewardship Council are pushing for change/progress alongside City Hive. We believe that ACT can be transformational for conversations on culture.”

Members of the Stewardship Council commented on the 50-signatory target:

Emma Wall, head of investment analysis and research at Hargreaves Lansdown:

“The ACT Stewardship Council has set a target of 50 signatories to the ACT standard by the end of this year. It is punchy but I don’t think as an industry that is stretching ourselves too far. 

“Hargreaves Lansdown has committed to the ACT Alliance - we have skin in the game - and we were the first firm to introduce the ACT Framework into our fund due diligence for all our investment solutions – this includes HLFM funds, the Wealth Shortlist, our model portfolios and Pathways solutions. This shows how we promote good corporate culture where we work and the firms we invest in. 

“Companies that become signatories to ACT understand that good corporate culture inspires better decision making and good outcomes. There is a fear around transparency - but being transparent is our pass mark - completion of the ACT Framework is a pass for us and means inclusion into our investment universe."

Justin Onuekwusi, CIO at St. James’s Place:

“From an investment perspective the strength of any research process is the importance you place on the quality and understanding of culture and diversity of thought whether its de-biasing, devil’s advocate, channelling the debate, evidence of groupthink, as well as exploring different backgrounds and life experiences and the motivations of people - this can be a key driver of edge.

“A lot of talk and debate in the industry is around D&I, and while that’s clearly very important, ultimately, culture is the foundation of those inputs.

“One of the things I’ve implemented since I joined SJP is to really get a handle on investment culture - I have set up a culture working group with the idea of thinking about culture, aspirational values and the way things are done, how people behave and make decisions within a company.

“In general, culture is very hard to define but it’s the responsibility of manager researchers to ask these questions. ACT helps to provide a common framework, which is important because otherwise people would be asking questions and thinking about things in a different way. With this, we have a benchmark of questions and thinking around culture specifically for the investment industry.”

Sophie Kennedy, joint CEO of EQ Investors:

“It is amazing how much Bev and Mandy have achieved with City Hive and the ACT Framework so far. They have driven this from nothing to now be in a position to target 50 companies as signatories on the topic of corporate culture. 

“At EQ Investors, we have engaged with all the asset manager partners we invest with and asked them to complete the framework, and take-up was very high. The next step is to encourage them to become signatories. 

“If we continue to push this forward, we really believe it will have a big impact on the industry around transparency - and win back trust that has been lost.”

Andrew Summers, CIO at Omnis Investments:

“Corporate culture has a huge and often overlooked impact on the likelihood of an organisation delivering good investment outcomes. Great people want to work in a great organisation, where talented individuals are attracted, motivated and retained by creating a stimulating, open and supportive environment. Too often scandals and bad outcomes in our industry have been due ultimately to poor corporate culture where bad behaviour is unchallenged.”

Mona Shah, senior sustainability strategist at Lombard Odier Investment Management:

“Corporate culture is deeply important because it signals what an organisation’s goals are and how it believes it will get there. From this, it is reasonable for an employee or client or other party to make working assumptions around how that goal may be achieved and possibly even the likelihood of getting there. As such, culture is a signal of risk and return.

“ACT offers a unique opportunity for capital allocators to do deep dive engagements into a single area or facet of an asset manager. It moves the conversation from being about imperfect abstract concepts to being tangible and possibly even measurable. Purpose, strategy and culture are the key ingredients to above average performance and without ACT, I believe most investors, myself included, were curbed in their ability to properly assess culture.”

Notes:

For more information on ACT, Interview opportunities and photos please email: nataliekenway@cityhive.co.uk or visit the new City Hive Press Centre.

For more information on ACT: https://www.investorsact.com/

Or for the Stewardship Council: https://www.investorsact.com/stewardship-council

For more information on City Hive and to check out our new look website: https://www.cityhive.co.uk/

CEO Letter

At the time of launching ACT in 2022, City Hive wrote to over 100 fund group CEOs to say investment firms are neglecting to support their most valuable assets, their employees, and asking them if they want to be the leader that is forced to make changes, or the leader that is part of the solution investing in creating a long-term, positive, impact on the industry.

The full list of ACT Signatories:

Aviva Investors

CCLA Investment Management

EdenTree

Federated Hermes

Invesco

Legal & General Investment Management

Liontrust

Lombard Odier Investment Management

M&G Investments

Mirabaud Asset Management

Rathbones

Redwheel

RBC Bluebay Asset Management

River Global

Schroders

TT International

WHEB Asset Management