Institutional Asset Management 28.04.23

Flexing the shareholder muscles

Oil & Gas companies and their commitment – or lack thereof – to the green energy transition continue to dominate the headlines.
This week BP faced a rebellion from big name institutional shareholders including the National Employment Savings Trust who are fed up with the company’s decision to dial back on emission targets.
Rather than honour an original promise to limit greenhouse gas emissions by 40 per cent by 2030, BP has since said it will only reduce production by 25 per cent.
At time of writing, whether the shareholder rebels were successful is yet to be known, but big-name financial services providers would rather investors took the engagement route than chose to divest.
This week we talked to Deutsche Bank (DB) Private Bank CIO Markus Mueller who says that while Oil & Gas firms can expect to see their revenues fall as a result of a move away from fossil fuels, investors are better served using their influence to drive positive change rather than pulling out.
"Financial markets may be overlooking the potential of these companies to earn competitive returns on their decarbonisation investments, providing opportunities for valuation-focused investors with multi-year investment time horizons. The global energy transition may therefore benefit some companies that financial markets are currently neglecting, based on possibly excessive discounting of specific sectors, perhaps including energy and gas utilities," Muller says.
Muller has a point; with ESG investors continuing to influence the company, BP has retained a market leading commitment to reducing emissions, which may have been abandoned if there had been a significant divestment.
In other news, Waystone Group which offers administration and other services to the asset management industry, continues its acquisition assault.
The firm acquired the Irish and UK businesses of Link Fund Solutions within months of its purchase of Centaur Fund Administration this January and hot on the heels of last year’s acquisitions of KB Associates and T. Bailey Fund Services last year.
Nancy Lewis, Executive Chairman, Waystone says the latest acquisition "further underscores Waystone’s strategic ambition of becoming the global leader in asset servicing", and it is indicative of the wider trend to manco and super manco organisations in the asset servicing sector.
Gill Wadsworth, Editor

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