An asset owner coalition, representing cUSD$1.5 trillion (cGBP£1.2 trillion) of their members savings, have co-authored1 and endorsed the Asset Owner Statement2 on Climate Stewardship, a new resource for the sector. Responding to asset managers’ requests, the statement sets out clear and consistent expectations regarding climate stewardship for them.
In the lead up to 20303, asset managers need to intensify their stewardship efforts to address the fiduciary risk that climate-related impacts present. The statement calls on asset managers to evolve and strengthen their climate stewardship strategies in light of the imperative need for climate action.
The Asset Owner Statement on Climate Stewardship aims to facilitate constructive conversations on climate stewardship and embed greater efficiencies into the stewardship chain, empowering asset manager stewardship teams to deliver on their asset owner climate objectives as part of their mandates. Ultimately, the group seeks to raise the bar on climate-stewardship across the investment sector.
Leanne Clements, Head of Responsible Investment at People’s Partnership, provider of The People’s Pensions, stated:
“Now more than ever, by working together asset owners and asset managers can contribute to a more efficient and competitive industry, ultimately benefiting members.”
Developed from the Asset Owner ‘Aligning Expectations roundtable’ the statement seeks to address the main challenge identified in the UK Asset Owner Stewardship Review 20234: an ongoing and material divergence between asset owner expectations and implementation of climate stewardship that limits progress towards a net zero world and better outcomes for beneficiaries.
The statement, signed by 26 investors from the UK, Europe, Australia and the US, makes clear its principle-based expectations5 of asset managers on the crucial issue of climate stewardship, as follows:
- Industry/market and public policy engagement should be core to the climate stewardship proposition across asset classes
- Where permissible, asset managers should prioritise collaborative initiatives to achieve greater impact and embed efficiencies in engagement activities
- Asset managers’ prioritisation framework for company engagement should be rooted in a robust theory of change that delivers maximum impact
- A systematic approach to voting is imperative
- The stewardship function needs to be appropriately resourced
As owners of capital, the coalition, value their asset managers as their strategic partners in delivering value for their members. Created as a resource to support and empower their asset managers in delivering on their behalf, the statement builds on existing industry guidance. It delves deeply into five key principles and provides a clear indication on the level of scrutiny and detail expected.
Lead of this initiative, Leanne Clements, Head of Responsible Investment for People’s Partnership, provider of The People’s Pension, said:
“We, as asset owners, are the owners of capital and the mandates, and in these challenging times it is now more important than ever as an asset owner community to send a strong collective principle-based signal to our asset managers as to what we expect of them. Time is running out in the lead of up to 2030, asset owners and asset managers must work together in partnership to drive meaningful change: not only in the companies in which we invest, but in the underlying economic, social and environmental systems upon which our members depend”.
Vaishnavi Ravishankar, Head of Stewardship at Brunel Pension Partnership, reinforced the message,
“Our collective statement from asset owners representing cUSD 1.5 trillion of assets under management, responds directly to feedback from our managers to hear from asset owners jointly on climate stewardship expectations and represents an important signal to the market. The statement signposts what we, as representatives of our beneficiaries’ long-term interests, consider important for fund managers to demonstrate. We expect this to be a living document that will evolve through ongoing dialogues with our managers but in the first instance, codifies what we consider as best practice to inform manager selection and monitoring.”
Shipra Gupta, Investment Stewardship Lead at Scottish Widows, said:
“Systemic risks and opportunities, like climate change, require systemic and systematic interventions across the investment value chain. This statement sets out a clear principles-based framework of asset owner expectations of their asset managers encompassing the importance of influencing and shaping policy and regulation, of working in collaboration with stakeholders, of using their shareholder rights and responsibilities more effectively, and all of it being embedded in appropriate sectoral strategies and relevant technical expertise.”
Garnering support for the statement remains ongoing as of the date of this press release. For further information, or to sign up to the statement please contact assetownerstatement@peoplespartnership.co.uk.
ENDS
Notes to editors:
1. The co-authors of the Asset Owner Statement on Climate Stewardship are Leanne Clements, Head of Responsible Investment for People’s Partnership, provider of The People’s Pension, Vaishnavi Ravishankar, Head of Stewardship at Brunel Pension Partnership and Shipra Gupta, Investment Stewardship Lead at Scottish Widows.
3. To keep global warming to no more than 2°C – as called for in the Paris Agreement – emissions need to be reduced by ~50% by 2030 and reach net zero by 2050.
4. UK Asset Owner Roundtable publishes UK AO Stewardship Review 2023 – Brunel Pension Partnership
5. For the avoidance of doubt, these principles offer flexibility to individual signatories to operationalise the principles as they see fit and in line with regulatory requirements in each jurisdiction.