NEW YORK, May 14, 2024 — Resources dedicated to the stewardship of investment capital should double as a proportion of total investment resources at industry level, as suggested in a new report available today from leading global advisory, broking and solutions company WTW’s Thinking Ahead Institute (TAI), commissioned by the United Nations-supported Principles for Responsible Investment (PRI).
The new report includes research conducted in collaboration with a technical working group of PRI members along with results from a Global Stewardship Resourcing Survey of 69 separate organizations, managing a total of $16 trillion 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%*. This is a percentage of total investment management costs. Examples of resourcing include spend on internal staff time, third-party providers of stewardship services, data, subscriptions, memberships and reporting costs, among several others mentioned in the report. The report makes clear that resources need to increase where such action is aligned with investors' fiduciary duties, a view supported by opinions from industry practitioners. Survey respondents agree that the current level of stewardship resources in the investment industry is inadequate and not fit for purpose.
In response, TAI suggests that the global investment industry needs to double stewardship resources over time to meet the increased demands and needs. This transition would be multiyear.
The report points out that our industry currently lacks the measures of costs needed to unpack the resourcing model for stewardship; therefore, today’s launch also includes the Stewardship Resources Assessment Framework — to enable the investment industry to assess the resources available to stewardship efforts in a more structured way as well as the subsequent improvement of such stewardship efforts over time.
This report was commissioned as part of the PRI's Active Ownership 2.0 program, which sets out a framework for the more ambitious stewardship needed to deliver against beneficiaries’ interests and improve the sustainability and resilience of the financial system.
“Our collaboration with the PRI on this essential project is driven by our mission to support long-term value for the investment community,” said Marisa Hall, head of the Thinking Ahead Institute. “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 recognizes stewardship not merely as a necessary function but also as a system-level and value-adding feature. We look forward to feedback from across the global investment industry on next steps and many future discussions on implementing these findings.”
Stephen Miles, head of Sustainable Investment at WTW, added, “The industry has improved in focusing on stewardship activities and outcomes; however, the other side of this coin — stewardship resourcing — has had too little attention despite it being the foundation.”
Nathan Fabian, chief sustainable systems officer at the PRI, comments, “Strong stewardship is needed now more than ever to fulfill fiduciary duties and deliver on client and beneficiary interests over the long term. These ambitions can only be met with adequate resourcing at the industry level. We call on investors to pave the way for data-driven approaches to stewardship resourcing that foster accountability, transparency and ultimately, impactful change.”
*as of August 31, 2023
The Principles for Responsible Investment (PRI) is the world’s leading proponent of responsible investment. Supported by the United Nations, it works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate, and ultimately of the environment and society as a whole. Launched in New York in 2006, the PRI has grown to more than 5,000 signatories, managing over US$121 trillion. For more information visit Principles for Responsible Investment (PRI).
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and asset managers committed to mobilizing capital for a sustainable future. It has 50 members around the world and is an outgrowth of the WTW Investments’ Thinking Ahead Group, which was set up in 2002. Learn more at Thinking Ahead Institute.
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