Asset management chiefs welcome European capital stewardship proposal

European Innovation Partnership plan discussed at EU Parliament event

Leading asset management figures have welcomed a proposal to set up a high level European group to promote capital stewardship.

The European Innovation Partnership (EIPs) on Capital Stewardship is an idea being developed by civil society group European Partners for the Environment with the backing of Eurosif, the European Sustainable Investment Forum, and a group of MEPs under the GLOBE EU banner.

EIPs are a relatively new concept that are designed to provide a forum for senior figures from EU member state governments, the European Commission and industry to coordinate action on a range of subjects.

There are currently five EIPs, on smart cities, ageing population, water, sustainable agriculture and raw materials. A feature of EIPs is commitments known as covenants; in the capital stewardship EIP, it’s envisaged that these will come from retail banks and institutional investors.

“We support the EIP model,” said Thomas Leysen, Chairman at KBC, the Belgium-based bancassuarance group with €155bn under management whose KBC Asset Management arm is one of the pioneers of European sustainable investment.“We have to bring partners together,” Leysen said at an event organised by EPE, Eurosif and GLOBE at the European Parliament last week.

His view was echoed by Alexander Schindler, head of institutional business at €200bn Frankfurt-based fund giant Union Investment, who said a capital stewardship EIP “could be a very appealing institution”.

But he called for clarity about the aims of the proposed body: “What do we want it to achieve and how?” He also called for a tight time schedule for the EIP, adding he preferred “small steps” rather than trying to achieve too much with in one go.

Eurosif Executive Director François Passant called for the asset management industry to back the plan, saying: “Please sign up to the call of interest. The political forces will not move unless this industry takes the lead.”

At the meeting, EU Environment Commissioner Janez Potočnik spoke warmly of his experience with the EIP on water. He advised the capital stewardship proponents to prepare their case well.

Speaking to his environment brief, he made the point that the current debate over long-termism and short-termism is an “artificial divide” – the resource efficiency question is in “the here and now”. And he said he would like to see resource efficiency “reflected in ratings of companies an projects”.