As environmental, social and governance points have acquired extra consideration in recent times, the stewardship panorama has advanced for asset homeowners, with a majority now saying they’re assessing ESG dangers and alternatives or are urging their managers to do the identical, in accordance with an Institutional Shareholder Providers survey revealed Tuesday.
Although solely 13% of respondents mentioned they assess ESG dangers and alternatives for the businesses of their portfolio in-house, 34% mentioned they urge exterior managers to take action and 29% mentioned they do each, ISS’ 2020 Asset Owner Stewardship Survey discovered.
Furthermore, 78% of respondents mentioned they have interaction straight and/or instruct their managers to have interaction with corporations, together with 43% who urge exterior managers to take action.
And 57% mentioned they both vote their very own proxies or present voting directions to their funding managers, whereas one other 32% delegate voting duties to their managers, the survey discovered.
ISS surveyed 79 asset homeowners in July and August, 63% of which had been from the U.S., 14% from Canada and the remaining 23% break up between European and Asian nations.
When requested about the principle driver for his or her ESG focus, 53% of respondents reported that they incorporate ESG to enhance long-term competitiveness and sustainability of the corporate, whereas 21% mentioned they contemplate it a part of their fiduciary duties, in accordance with the survey.
“There are clearly insights to be gained for the long-term efficiency of corporations, and since that’s defending long-term efficiency for the asset proprietor by way of returns, it’s actually vital,” Ariane de Vienne, ISS’ world head of asset proprietor technique, who spearheaded the survey, mentioned in a cellphone interview. “But quick time period it’s nonetheless troublesome as a result of whereas there may be numerous knowledge, how do you choose the salient ones? Do you’ve gotten the fitting platform or are you conscious of the fitting expertise accessible at present to report it out? So I feel this can be a transition interval and that is why we now have this dichotomy.”
The survey discovered that of the 37% of asset homeowners that at present measure the progress made through their engagement and/or voting actions, 71% felt that they didn’t have the fitting instruments or knowledge to do it work successfully. And of the 63% who don’t presently measure progress, a majority (56%) mentioned they want to have the ability to accomplish that. “Apart from the aforementioned employees limitation, it’s affordable to imagine that this group can be held again by the dearth of related instruments or knowledge,” ISS mentioned.
Of the respondents that weren’t performing any duties themselves — like firm engagement, ESG danger/alternative evaluation or proxy voting — 38% mentioned they intend to convey a number of of the duties in-house going ahead.
Although that is the primary survey of its sort that ISS has revealed, Ms. de Vienne mentioned it will not be the final. Asset proprietor stewardship is a journey “and it is a journey that is accelerating,” she mentioned. “It’s totally encouraging to see that asset homeowners are taking an lively half in it and I feel the market contributors must see the place asset homeowners want additional providers or info or expertise to allow them to make their voice heard higher.”