Shareholder Rights Directive

Question 1

What is the Shareholder Rights Directive (SRD II)?

Answer 1

1. Tackles lack of shareholder engagement in the stock market
2. Requires asset managers and institutional investors to put in place a shareholder engagement policy.
3. Improve transparency of their investment policies.

Question 2

With regards to occupational pension schemes, what does SRD II require?

Answer 2

1. Requires trustees to publish information regarding the development and implementation of the shareholder engagement policy.
2. Publicly disclose details of their investment strategy and the scheme’s arrangement with the asset manager
3. This should be published by the scheme’s trustee in SIP (statement of investment principles)

Question 3

What are the Climate Change Governance Regulations?

Answer 3

1. Require trustees to calculate a new “portfolio alignment” metric
2. Should tell us to what extent the scheme’s investments align with the Paris Agreement Goal of limiting global warming to below 2°C
3. Should also pursue efforts to limit global temperatures to 1.5°C above pre-industrial levels.