Collaborative engagements in stewardship are essential because they bring together diverse expertise and resources, leading to more effective and innovative solutions. By sharing responsibility, these collaborations foster a sense of shared ownership, enhancing trust and commitment among stakeholders. This collective approach allows for pooling resources, broadening impact, and ensuring adaptive, resilient management. Additionally, collaboration increases the legitimacy and buy-in of decisions, making them more sustainable in the long term. Overall, working together in stewardship efforts leads to more comprehensive, inclusive, and successful outcomes. It is crucial to understand how they work and how Investors can maximize their impact by championing them. However, we see that there has been more recent backlash against the use of collaborative engagements due to political differences in the US and Europe.

Why Collaborative Engagements Matter:

Collaborative initiatives in stewardship are vital for achieving more effective, inclusive, and sustainable outcomes, as they leverage the strengths of multiple stakeholders working together toward a common goal. These can include the environment, community assets, or financial investments. They also give Asset Managers the power and opportunity to tackle thematic and systemic ESG issues. For example, given the existential threat posed by climate change, investors need to act collaboratively to address the issue. Several important collaborative partnerships have emerged in recent years. This suggests that investors are indeed starting to act at scale, offering a hopeful signal that tangible action is being taken which is capable of generating results. The work of Climate Action 100+ is arguably one of the successful collaborative engagement efforts and we can see more collaborative efforts evolving around other Themes.

Other benefits of participating in collaborative initiatives include:

• Mitigating ESG Risks:
  • Joint efforts lead to a deeper understanding of ESG risks and more effective strategies to address them. Collaborations, such as Climate Action 100+, enable asset managers to pool resources and expertise, enhancing their ability to influence corporate behaviour on critical issues.

• Benefits to Asset Managers and Clients:
  • Collaborations increase the influence and reach of individual asset managers, amplifying their impact on investee companies.
  • Clients of asset managers benefit from more sustainable investment portfolios and potentially better long-term returns due to improved risk management.

• Advantages for Investee Companies:
  • Companies receive clear, consolidated messages about investor expectations on ESG issues which leads to more focused and effective responses.
  • Collaborative engagements can provide companies with access to a broader range of investor perspectives and expertise, aiding in their sustainability journey.

• Impact on the Wider Community:
  • Collective investor actions contribute to broader societal benefits, such as reduced environmental impact and improved social standards.
  • Collaborations help in setting industry-wide benchmarks and best practices, promoting a shift towards a more sustainable and equitable global economy.

We published another blog this year on the Role of Collaborative Engagements among Asset Managers based on our detailed analysis of 75+ Global Asset Managers activities. Our summary shows that these collective efforts are not only mitigating ESG risks but also yielding enhanced returns and bolstering reputations: setting a new standard in investment stewardship.

How to Champion and Maximise Collaborative Stewardship Efforts:

As we’ve seen, collaborative engagements have tremendous potential for impact at scale while also benefiting Investors. This collective approach not only helps in overcoming challenges like resource constraints and varying levels of access to companies but also enhances the credibility of engagements, making it more likely that companies will respond positively. However, to be able to reap the benefits of these collaborative efforts, Investors need to invest time in understanding how they function and how they can make the most out of them. Without the proper use of collaboration in stewardship, resources and efforts can be futile. Thankfully there have been more recent publications on how to optimise these efforts.

The guide on conducting collaborative engagements by the PRI provides a comprehensive approach for investors working together on ESG issues. It outlines the following key steps:

• Define Objectives and Scope: Establish clear goals and boundaries for the engagement.
• Stakeholder Selection: Choose relevant stakeholders based on expertise, influence, and alignment with objectives.
• Planning and Coordination: Develop a structured plan, define roles, and ensure effective coordination among participants.
• Execution and Monitoring: Implement the engagement strategy, continuously monitor progress, and adapt as necessary.
• Reporting and Learning: Maintain transparency through regular reporting, and document lessons learned for future improvement.

Growing Political anti-ESG sentiment impacting Collaborative Initiatives:

As we have seen, collaborative engagements have tremendous potential for impact at scale. However, with recent political anti-ESG sentiment, some initiatives have suffered from increasing criticism and withdrawals. Most recently, at least six Climate Action 100+ signatories have dropped out amid the latest push against the initiative by Republican members of the House of Representatives in the US. A growing number of US Investors are exiting the group, as Republican officials sent letters to over 130 U.S.-based Investors that are members of CA100+, inquiring about their involvement in the group.  A spokesperson for CA100+ said that the letters “are another attempt to deter investors from considering and acting on climate risks and opportunities” and condemned the “undue politicisation” of the initiative. This growing push against ESG initiatives has been gaining traction particularly in the US. It is crucial that Investors retain their own investment strategies with no outside interference. Collaborative initiatives are currently at a crossroad, being challenged by politics and their own agenda. Investors need to step up and show that they will not be swayed or intimidated by party politics.

“Alone, we can do so little; together, we can do so much.” – Helen Keller

Leveraging Technology for Collaborative Engagements:

Technology serves as a powerful catalyst in maximising the efficacy of collaborative engagements. By leveraging sophisticated engagement tracking systems, asset managers can monitor interactions with investee companies in real-time. Ensuring that key sustainability goals are pursued diligently. Such platforms provide a centralised dashboard, offering a holistic view of engagement activities and progress. Furthermore, the adoption of standardised metrics facilitated by technology allows for the quantification of ESG impacts. This standardisation is crucial for asset managers to measure, compare, and communicate the outcomes of their initiatives effectively.

At Maanch, we have released a specific feature on our Engagement Tracker tailored for Investors to track Shared Collaborations. Through this feature, users of the platform can add collaborators extending beyond their organisation to log collaborative engagements and make decisions through collective intelligence.

Conclusion:

It is clear that collaborative initiatives in stewardship have tremendous benefits for Investors and potential for systemic change around global issues. Although there has been recently an increase against the use of these initiatives, Investors are still engaging and promoting these global efforts. It is crucial these collaborative engagements are championed correctly to be able to reap the benefits. The use of technology to track these shared collaborations increases the efficiency and effectiveness of stewardship efforts. The future of collaborative engagements resides in the hands of Investors. Initiatives such as CA+100 will be anticipating the next few months as politics seem to be increasingly shaping these decisions.