Building the momentum for effective investor stewardship
05 February 2014
Standard Life Investments, the global investment manager, and Tomorrow’s Company, the London based global think tank, have today issued a [[[report]]]] with practical recommendations to stimulate change and build momentum for improvements to build on the success of the UK’s Stewardship Code and raise the bar from compliance to excellence. “Building the Momentum for Effective Investor Stewardship” identifies a number of barriers to better investor stewardship including:
- A very uneven understanding of stewardship and its importance throughout the stewardship chain
- Limitations in the view that many investment consultants have of their role
- The closure of defined benefit schemes (with their collective decision-making) and the consequent dispersal of decision-making to millions of individuals
Guy Jubb, Global Head of Governance and Stewardship, Standard Life Investments, said:
“Stewardship is no longer an optional extra and has to be taken seriously. Despite being part of daily parlance, Stewardship still struggles to secure its place at the heart of the relationships between those involved in the stewardship chain. We firmly believe that this has to change and that every player in the stewardship chain – asset owners, investment advisors and investment managers – should play their part to promote the success of companies and deliver long-term prosperity.
“The recommendations in the report are designed to ensure that all those involved in the stewardship chain focus on the creation of value by companies which will in turn help enhance portfolio returns and deliver value to the ultimate clients and beneficiaries.”
Commenting on the findings, Mark Goyder, Founder Director, Tomorrow’s Company, said:
"The stated aim of the UK Stewardship Code is to promote the long term success of companies. We believe the recommendations taken as a whole will contribute significantly to achieving this objective. In addition, they will improve the accountability of signatories to the UK Stewardship Code."
The report’s recommendations include:
- A better definition of the meaning of stewardship within the UK Stewardship Code
- Simplifying and strengthening the criteria for assessing investor stewardship, including the development of an approach to stewardship accreditation to create an incentive to excel and to inform savers.
- A review by the investing consulting industry into its own contribution to the advancement of stewardship
The report is the result of an extended and practical discussion amongst all parts of the investment chain.