LONDON, May 14, 2024 – Resources dedicated to the stewardship of investment capital should double as a proportion of total investment resources at industry level suggested in a new report from the 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, and a Global Stewardship Resourcing Survey of 69 separate organisations, managing a total of $16 trillion USD 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, 3rd party providers of stewardship services, data, subscriptions, memberships or reporting costs, amongst several others mentioned in the report. There is a clear view that resources need to increase – where this is aligned with investors' fiduciary duty - supported by opinions from industry practitioners. Survey respondents agreed 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 multi-year.
The report pointed out that our industry currently lacks the measures of costs needed to unpack the resourcing model for stewardship. Therefore, today’s launch 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.
Further details are available in the full report, Putting resources where ambitions are, now available. This report was commissioned as part of the PRI's Active Ownership 2.0 programme, 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.
“Stewardship has always played a crucial role in the investment industry but is too often under-resourced.”
Marisa Hall | Co-Leader of the Thinking Ahead Institute
Marisa Hall, Head of the Thinking Ahead Institute, comments: “Our collaboration with the PRI on this essential project is driven by our mission to support long-term value for the investment community. 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. 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 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. We call on investors to pave the way for data-driven approaches to stewardship resourcing which foster accountability, transparency, and ultimately, impactful change.”
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 mobilising 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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