Double resources to make stewardship fit for purpose, new report says

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Resources made available for investment stewardship should double as a proportion of total investment spending at industry level, a new report has said. The authors have also created a tool to help investment providers assess stewardship resources.  

The report, ‘Putting resources where stewardship ambitions are’ by the Thinking Ahead Institute, commissioned by the UN Principles for Responsible Investment, surveyed 69 organisations managing a combined $16tn globally. It includes research conducted together with a technical working group of PRI members.  

The average stewardship resourcing level is currently at around 5% of total investment management cost, the research and survey suggest, looking at spending on internal staff time, third-party providers of stewardship services, data, subscriptions, memberships or reporting costs among others. The institute set up by consultancy WTW suggests that the global investment industry needs to double stewardship resources over time to meet increased demands and needs.  

Marisa Hall, who heads up TAI, said: “Stewardship has always played a crucial role in the investment industry but is too often under-resourced.”  

The work has strengthened TAI’s understanding of resourcing stewardship, she noted, adding: “We look forward to feedback from across the global investment industry on next steps and many future discussions on implementing these findings.”  

Strong stewardship is needed “now more than ever” to fulfil fiduciary duties and deliver on client and beneficiary interests over the long term, argued Nathan Fabian, chief sustainable systems officer at the PRI.  

“These ambitions can only be met with adequate resourcing at industry level.  We call on investors to pave the way for data-driven approaches to stewardship resourcing which foster accountability, transparency, and ultimately, impactful change,” Fabian said.   

The TAI report includes a Stewardship Resources Assessment Framework which aims to help the investment industry assess the resources available to stewardship efforts “in a more structured way, as well as the subsequent improvement of such stewardship efforts over time”, according to TAI. 

Master trust the People's Pension was part of the Stewardship Resourcing Technical Working Group that fed into the report. Last month, it published its responsible investment policy which requires managers to have minimum commitments to stewardship and a net zero goal.

People's head of responsible investment, Leanne Clements, said being part of the working group "fuelled our decision to introduce a minimum requirement for managers to have a suitable commitment to adequate stewardship resourcing above their peers".

Under the new policy, the £26bn master trust will review its relationships with asset managers that fail to meet its requirements.
What can pension funds do to support an increase stewardship resources across the investment industry? 

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