A new report from the Thinking Ahead Institute (TAI), commissioned by the Principles for Responsible Investment (PRI), has concluded that investment stewardship resources are vastly under resourced, suggesting that the investment industry should double its stewardship resources.
The report’s research was conducted in collaboration with a technical working group of PRI members, and a global stewardship resourcing survey of 69 separate organisations, managing a total of €14trn in assets globally.
Based on the survey findings and TAI’s research, the report argues that the industry average stewardship resourcing level is currently at around 5% of total investment management costs.
The Stewardship Resourcing Technical Working Group, which was created to understand existing stewardship resourcing practices, suggested the following:
- a more structured approach to measurement of stewardship resources is needed;
- stewardship resources need to double overtime at the industry level;
- a new industry tool, Stewardship Resources Assessment Framework, that can empower all investment organisations to assess their stewardship resources.
Marisa Hall, head of the TAI, said: “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 UK’s largest master trust, The People’s Pension, which is part of the Stewardship Resourcing Technical Working Group, has backed the report adding that the TAI and PRI research fuelled its own decision in requiring managers to put their resources where the fund’s stewardship ambitions are.
Leanne Clements, head of responsible investment for The People’s Pension, said: “Being part of this Stewardship Resourcing Technical Working Group and the vital work that the Thinking Ahead Institute and the PRI are doing in this area fuelled our decision to introduce a minimum requirement for managers to have a suitable commitment to adequate stewardship resourcing above their peers, as highlighted in The People’s Pension’s newly launched Responsible Investment Policy.”
Nathan Fabian, chief sustainable systems officer at the PRI, added: “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.”
This article has been amended since publication to clarify the industry average stewardship resourcing level.
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