Active managers are under pressure to become more engaged with their investments, as more money flows into passive funds.

There is a lot of pressure on active managers to show how they are working for investors, panelists said at The Deal’s 2020 Corporate Governance London conference held on Wednesday, Feb. 26.

Active managers are taking a more active stance “for alpha,” PJT Partners Inc. managing director Lauren Gojkovich told delegates, and it is also a “marketing tool” to try to justify their higher management fees.

The trend, she added, is being fed by the massive shift in assets under management to passive funds.

Debevoise & Plimpton LLP partner Raman Bet-Mansour agreed that the increased activist investor-like techniques used by active managers is a marketing tool, but its is also being used a way to increase the valuation of companies with already high valuations.

Bet-Mansour also said that as more active managers become engaged with their shareholdings, others will do it.

Gojkovich gave the example of Legal and General’s, which is a traditional active manager, campaign to elect new independent directors at Franco-Italian eyewear maker EssilorLuxottica SA. The campaign gained the backing from other traditional managers such as Fidelity International and Baillie Gifford & Co.

Robeco Institutional Asset Management BV governance and active ownership specialist Michiel van Esch told delegates that institutional investors in Europe are almost required to become engaged with their investments.

Netherlands-based Robeco has become active in the U.S. filing shareholder resolutions, including on fair drug pricing. Very often the firm will partner with a U.S. institutional investor, van Esch said.

He said shareholder resolutions are much more common in the U.S, and “management might not be responsive if you don’t file a shareholder resolution.”

Bet-Mansour said that although it is easier to launch a resolution in Europe, often with just a 5% shareholding needed, the absence of proxy fights is a cultural issue.

“We are seeing more and more of them though,” he said.

However, he pointed out that there is much more dialogue with boards in Europe and “people go public when engagement has not gone well.”

He added that “proxy campaigns are more akin to political campaigns than a financial transaction,” as each side tries to sell its vision for the company.

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