Stewardship has travelled a long way over the last two decades, and while it has not always been smooth sailing, when done well it has delivered positive outcomes for investors, companies and society as a whole.
But active ownership is not without its challenges. Although these have changed over the years, it is instructive to see how and why. For example, in the early days we were often asked about the ‘free rider’ effect, meaning that if one owner is engaging with a company, then what is the point of another doing it too? However, the adoption of stewardship codes in many key markets, fiduciary obligations and beneficiary pressures have all encouraged institutional investors to become more responsible, active owners of their assets. For many, sitting on the sidelines is no longer an option.
Another early concern that we often heard related to a fragmented investor base. How could investors engage with all the companies in their portfolios, and how could a company be expected to speak to all its investors?
Within EOS we address this by looking at the size of our client holdings, the materiality of the issue in terms of risk or opportunity, and the feasibility of engagement. The growth of collaborative engagement initiatives around key themes has also helped make things simpler for companies, while investors retain voting and investment decision independence, according to their own policies.
But what about today’s stewardship challenges? In a 2024 survey of our clients, the EOS team and our alumni, we identified some key themes. These included greenwashing, the dangers of box-ticking, the rapid expansion of new topics and the squeeze on resources and costs.
You can read more about these themes, and our hopes for stewardship in 2044 in our Q3 2024 Public Engagement Report.
A new frontier for stewardship
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