World's largest asset managers 'failing to hold firms to account': research

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World's largest asset managers 'failing to hold firms to account': research

A large majority of the world's largest asset management companies are failing to address human rights issues such as slavery and controversial weapons through their investment processes, according to responsible investment charity ShareAction.

ShareAction, based in the UK, found that almost half, or 47%, of asset managers, with combined AuM of $45trn, do not prohibit their fund managers from investing in weapons that cause excessive or indiscriminate harm.

Furthermore, eight in ten, or 84%, do not stop their funds from purchasing sovereign bonds from countries under international sanction for human rights abuses, which ShareAction said undermined international efforts by allowing investment in countries such as Libya, Yemen and North Korea.

The majority of the most influential investors not only fail to do the minimum by complying with international human and labour rights frameworks, but also actively finance activities which cause human harm and violate labour rights."

In addition, just three of the 75, or 4%, investment management firms captured by ShareAction's survey had their own dedicated human right policy; 15% make no reference to human rights at all.

The laggards on human rights issues, ShareAction claimed, were some of the largest in the dataset, including J.P. Morgan Asset Management, Vanguard, BlackRock and Capital Group.

European asset managers are leading the way, the report suggested, with Robeco, BNP Paribas Asset Management and Legal & General Investment Management showing the strongest performance on human rights.

Felix Nagrawala, a senior analyst at ShareAction, said: "The findings of our assessment show that the world's largest asset managers, while paying lip service to the protection of human rights, are largely failing to hold the companies in their portfolios to account for human and labour rights abuses. The majority of the most influential investors not only fail to do the minimum by complying with international human and labour rights frameworks, but also actively finance activities which cause human harm and violate labour rights. 

Savers in particular will no doubt be shocked to find how little the industry has done to build in safeguards that could prevent their money from being used to fund weapons manufacturers and governments involved in human rights abuses.

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