Stewardship
IntermediateStewardship is the responsible management and oversight of investments by asset owners and asset managers on behalf of their clients and beneficiaries, including engaging with companies and voting at shareholder meetings to protect and increase long-term value.
Stewardship goes beyond choosing which investments to buy and sell. It involves actively using the rights and influence that come with owning shares and other investments.
Stewardship activities include engaging with company management and boards on issues such as strategy, performance, governance, executive pay, climate change and social issues; voting at company meetings; working with other investors to raise concerns; and, if necessary, escalating issues through public statements or shareholder resolutions.
For example, a pension fund might meet a company’s board to press for stronger climate targets and vote against the re-election of directors if it sees no progress.
Many countries have stewardship codes that set out expectations for investors. The UK Stewardship Code, first published in 2010 and revised several times, is one of the best known, and similar codes exist in Japan and many other markets. Signatories report on their stewardship activities and outcomes. Critics argue that some investors’ stewardship is limited, while others question whether investors should pursue environmental or social goals.
For worked examples and full lessons, visit notesbysara.org.