Stewardship is in the spotlight. In the UK, government strategy is to use the influence of pension funds to lead the fight against climate change. The recently launched Net-Zero Asset Owners Alliance, a global group of asset owners committed to aligning their portfolios with net zero by 2050 at the latest, considers engagement with companies as the way to create real-world impact. Stewardship on social issues is also gaining ground with the Principles for Responsible Investment (PRI).
Engagement is often cited by asset managers as a preference over divestment, with many preferring to steward companies towards better business practices than reduce their investment. However, asset managers’ commitment to stewardship often fails to be backed up by credible evidence, and is thus under increased scrutiny by clients, regulators, and civil society.
The new UK Stewardship Code 2020 has sought to refresh and energise stewardship activity in the UK through a new ambitious approach. The new code sees a shift in focus from policy statements to outcomes, demonstrating the need for investors to show impact through their stewardship activity. The narrative has now very much changed: stewardship without outcomes is no longer seen as sufficient. Voting is a critical part of effective stewardship. Private and collaborative engagements are important but, without consistent voting, investors are not using their full stewardship capabilities.
This report examines how 60 of the world’s largest asset managers have voted on shareholder resolutions on climate change and social issues during the 2020 AGM season. Have they lived up to the stewardship hype?