ESG and stewardship; two halves of the same picture

The topic of previous blogs, ESG (environmental social and governance) investing has accelerated over recent years, and is only gathering momentum. According to Bloomberg Intelligence, global ESG  assets are likely to surpass $41 trillion in 2022 and $50 trillion by 2025. Indeed, it’s reported ESG-focused funds have outperformed traditional funds over the past ten years. In addition to strong financial incentives, the rise of ESG is fueled by investors’ desire to do the right thing for communities and the planet. But how does ESG fit with stewardship?

Stewardship is often seen as the ‘bigger picture’, encompassing the ongoing governance of all companies, funds, and portfolios that asset managers oversee, and not just their ESG products and investments. But once viewed as two separate functions, the largest global fund managers are combining the two to integrate ESG metrics across all their assets and portfolios

As Fidelity’s Global Head of Stewardship and Sustainable Investing, Jenn-Hui Tan, explains ‘The journey the ESG industry has been on is to converge these two things together, to recognise that you are only going to be able to change bigger picture thematic issues like climate change, modern slavery or biodiversity, through the practice of stewardship. Through your active engagement with the companies you are invested in.’

The demand for transparency and ongoing evidenced action are set to increase as more robust regulation and standardisation comes into play. Investors expect to see continuous improvement across material environmental and social criteria aligned to law, the latest science, standards and disclosure benchmarks. Use SI Engage to meet and exceed best practice across stewardship, ESG and active engagement now. With clarity and cohesion as its heart, our all-in-one data capturing system will demonstrate adherence to regulatory requirements, such as SFDR and to regulatory bodies with minimal workflow disruption. 

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