Stewardship in 2026’s ESG backlash era

Stewardship is not a bolt‑on to ESG for UK asset owners; it is where beliefs about risk, return and real‑world impact are increasingly being tested in practice. Recent data from Hymans Robertson underlines this: 81% of UK asset owners say ESG is more important than two years ago, 87% see stewardship as effective in driving change, and 42% expect it to add 1–3% per annum to financial outcomes, with only a small minority seeing no benefit at all.

ESG ‘backlash’ vs ESG reality

Despite headlines about an ESG backlash, UK asset owners are not retreating from ESG or stewardship. The Hymans Robertson survey of 100 UK asset owners found:

• 81% say ESG is more important to them than it was two years ago.
• 90% say ESG considerations are becoming more complex.
• ​87% view stewardship as effective in driving change.

Crucially, 42% of respondents expect stewardship activities to add between 1% and 3% per annum to financial outcomes, while only 12% see no benefit and just 2% expect a negative impact. For UK schemes, that positions stewardship squarely within fiduciary duty: a practical lever for managing risk and enhancing returns, rather than a political statement.

Where stewardship sits within ESG

In practice, ESG sets the what; the financially relevant environmental, social and governance issues, while stewardship is the how; the exercise of ownership to manage those issues over time. Recent UK developments reinforce this integration:

• The UK Stewardship Code 2026 embeds ESG factors across all stewardship principles and ties them explicitly to long‑term sustainable value creation.
• The FCA’s Sustainability Disclosure Requirements (SDR) regime puts greater emphasis on how investors use stewardship to substantiate “sustainable” claims and avoid greenwashing.​

For analysts, that means stewardship data is vital: voting, engagement themes, escalation steps and observed outcomes are all decision‑useful inputs that sit alongside cash flow forecasts and balance sheet analysis.

Why stewardship is getting harder and more important

Hymans Robertson’s research highlights a growing tension: 59% of asset owners think stewardship has become harder, citing regulatory changes and an increasingly complex ESG landscape. Several forces are at play:

1. Intensifying physical climate risks and associated insurance losses are raising questions around resilience, capital allocation and stranded‑asset risk.
2. Geopolitical tension is testing views on defence exposure, supply‑chain security and human rights, making some ESG constraints less clear‑cut than they once appeared.
3. New technologies, particularly AI, are generating fresh governance and social risk questions, from workforce impacts to algorithmic bias and data governance.

At the same time, some large US managers have stepped back from visible ESG and climate‑related activities in response to political pressure and litigation risk, weakening the clarity of stewardship signalling in global markets. Asset owners are responding by tightening expectations: 67% in the Hymans survey expect their managers to do more on responsible investment, especially on climate and other systemic risks.

What this means for asset owners and managers

The gap between asset owner expectations and some managers’ activity is already influencing mandates and monitoring frameworks. Asset owners are responding on several fronts: many are undertaking more training on systemic risks such as climate, nature and AI to ensure investment and governance decisions can be defended, while others are updating responsible investment policies to clarify expectations on climate risk, data, escalation and voting, and to align with the UK Stewardship Code’s updated reporting framework. At the same time, they are running more detailed assessments of managers’ ESG and stewardship capabilities, focusing in particular on how outcomes are evidenced rather than just described in policy documents.

Where managers step back, asset owners are stepping up: over half of Hymans’ respondents reported engaging managers specifically about declining ESG or stewardship capabilities in the current environment, and 48% said they had increased RI or stewardship activity over the past two years. Climate remains the sharpest point of that scrutiny, with asset owners increasingly willing to reallocate mandates where climate stewardship is misaligned with their beliefs or policy.

Implications for investment analysts, and where SI Engage comes in…

For investment analysts and their teams, this shift changes what “good” looks like in day‑to‑day practice:

• Stewardship inputs need to be treated as financially relevant data: issue‑level engagement records, milestones, and escalation outcomes should inform valuations, risk assessments and position sizing, not sit in a separate ESG report.
• Evidence, not slogans, is what matters: with ESG more politicised and litigation risk rising, analysts need audit‑ready, consistent narratives that link engagement activity to portfolio‑level risks, opportunities and performance.
• Reporting has to keep up: the UK Stewardship Code 2026 and SDR regime are raising the bar for how clearly investors show the connection between their stewardship and long‑term value creation.

SI Engage is designed for this very environment: it helps investment teams turn dispersed engagement notes, meeting outcomes and internal assessments into structured, evidence‑based stewardship records that can be queried, analysed and translated into clear portfolio‑level messaging. That gives analysts a transparent link between company‑level engagement and the investment thesis, and gives asset owners the documentation they need to judge whether stewardship is genuinely supporting both ESG objectives and returns.

We’d love to discuss how SI Engage can help you – talk to us today!