Bridging the stewardship resource gap in investment

The importance of stewardship in investment cannot be overstated. Stewardship, which involves managing investments responsibly to generate long-term value, is essential for the sustainability of the investment industry. However, current resources dedicated to stewardship are significantly lacking, creating a gap that must be addressed to meet growing demands and expectations.

Industry call for doubling stewardship resources

A recent report from the Thinking Ahead Institute (TAI), commissioned by the Principles for Responsible Investment (PRI), underscores the urgency of this issue. The report, “Putting Resources Where Stewardship Ambitions Are,” reveals that stewardship resources account for only about 5% of total investment management costs. This figure is alarmingly low, given the critical role of stewardship in ensuring responsible and effective investment practices.

The inadequacy of current stewardship resources

Based on a survey of 69 organisations managing a combined $16 trillion in assets, the TAI report highlights a consensus among industry professionals that current stewardship resources are insufficient. The survey respondents agree that the industry must double its investment in stewardship over the coming years to meet increasing demands. This multi-year transition is essential for aligning resources with the strategic importance of stewardship in the investment sector.

Marisa Hall, head of the Thinking Ahead Institute, emphasises the crucial nature of this project: “Our collaboration with the PRI on this essential project is driven by our mission to support long-term value for the investment community. Stewardship has always played a crucial role in the investment industry but is too often under-resourced.

“This work has further strengthened our understanding of the many nuances and challenges of resourcing stewardship – even as the industry increasingly recognises stewardship not merely as a necessary function but as a system-level and value-adding feature.”

The need for structured assessment and data-driven approaches

One of the significant challenges identified in the report is the lack of structured measures to assess the costs and resources dedicated to stewardship. To address this, TAI has introduced the Stewardship Resources Assessment Framework. This framework aims to help the investment industry evaluate and improve the allocation of resources towards stewardship, ensuring that these efforts are effectively supported and enhanced over time.

Nathan Fabian, chief sustainable systems officer at the PRI, calls for a data-driven approach to stewardship resourcing: “Strong stewardship is needed now more than ever to fulfil fiduciary duties and deliver on client and beneficiary interests over the long term. These ambitions can only be met with adequate resourcing at industry level”.

How SI Engage can helps investment teams

SI Engage provides a streamlined solution for managing engagement data. It enables investors and asset managers to plan, track, and report activities across their portfolio companies efficiently. SI Engage empowers investment firms to fulfil their fiduciary duties and achieve long-term success by simplifying data management and enhancing the efficiency of stewardship activities. Investing in stewardship is a strategic imperative that demands attention and resources to ensure a sustainable, value-driven future.

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