Stewardship is evolving from an improvised and scattered effort into a structured and data-driven practice. Asset owners want to compare, verify and act on engagement data. Asset managers need to demonstrate clear links between activities and outcomes. But disconnected technology tools and siloed data makes this nearly impossible.
The volume of engagements between asset managers and companies is now colossal. In 2023, the top five global asset managers – BlackRock, Vanguard, Fidelity Investments, State Street Global Advisors, and J.P. Morgan Asset Management – cast over 605,000 votes and held 8,333 company engagements.
Now, more than ever, investors need modern technology to manage this output. Yet 80 per cent of investors still depend on spreadsheets, siloed workflows and retrospective reporting.
Without shared infrastructure, collaboration within stewardship teams remains slow and inconsistent. A reliance on spreadsheets can lead to errors. Best-in-class technology can change this.
Stewardship needs resourcing for technology:
Good stewardship technology requires investment. A 2024 study written by the Thinking Ahead Institute, commissioned by the PRI, unearthed several key findings.
More measurement of stewardship resourcing is required, it found. Stewardship resources, meanwhile, need to be double those currently committed by industry. Survey respondents allocate just 7 per cent of their overall investment resources to stewardship. The TAI believes this actual figure could be lower than 5 per cent.
The PRI recommends improving stewardship resourcing. It also suggests more product asset owner/asset manager engagement. “Asset owners could, and should, exert more influence over asset managers”, it says.
“The industry can only address the issue of insufficient resources if resources are measured”, it adds.
Technology enables a single source of truth:
Platforms create a single source of truth across the investment chain. Technology can align expectations, reduce duplication and reveal performance patterns.
Asset management giants such as Baillie Gifford recognise the power of technology and third-party providers. “We recognise that effective use of third party vendors can support our client service and stewardship activities,” the manager says in its 2023 stewardship report.
“We recognise the need to develop a wider pool of data sources to allow for more robust reporting,” it continues.
Managers understand the benefits of combining in-house resources with external data.
Asset manager M&G says in its 2023 stewardship report that “all of our investment teams have access to a range of external ESG data providers, as well as a suite of internally-developed proprietary tools”.
“These help ensure that the teams have sufficient ESG data and research that can be used by both portfolio managers and analysts when engaging with companies on the issues that are material to them.”
Stewardship is about more than voting:
Proxy voting is a huge part of stewardship. But writing in FINTECH Circle, Maanch chief executive officer Darshita Gillies, argues that stewardship is about more than votes.
“Ongoing engagement – through dialogue, collaboration on material issues, and well-planned escalation – is driving systemic change,” she writes. “Many asset managers now conduct thousands of company engagements each year.”
“With over 60% of shareholder proposals focused on ESG issues, the shift from pledge to practice is already underway.”
More engagement alone won’t yield more mandates for asset managers. Winning the confidence of asset owners will come from being able to prove measurable outcomes. Technology is essential to doing this.
Conclusion:
The days of loading spreadsheets ad hoc with data are over. Stewardship teams need to be able to prove their effectiveness to clients and upper management. The value of stewardship is understood, but investors need to employ more than good faith when working with asset managers. Technology holds the key to their confidence.
If you would like a demonstration of the Maanch Engagement Tracker, please book an introduction with our founder and chief executive officer Darshita Gillies via this link.
