Call for investors to use “forceful stewardship” with policy makers

New briefing note from Columbia Center on Sustainable Investment

There’s been a call for investors to take up “forceful stewardship” with policy makers on issues like climate change, with researchers saying investors are nowhere near where they need to be in terms of active engagement on critical ESG issues like climate change.

It would be driven by demand from clients and beneficiaries, it is claimed.

The ‘forceful stewardship’ term was coined a few years ago by Preventable Surprises’ Raj Thamotheram and Howard Covington, the former New Star Asset Management CEO; it has now been taken up in a briefing note published by the Columbia Center on Sustainable Investment (CCSI).

CCSI is part of the New York-based Ivy League University; its Advisory Board is chaired by leading academic Jeffrey Sachs, who is Director of Columbia’s Center for Sustainable Development.

The authors of the note are development strategist and investment manager Aniket Shah and Gordon Clark, the Director of the Smith School of Enterprise and the Environment at the University of Oxford.

Shah, formerly with Investec Asset Management, is Head of Sustainable Investing at OppenheimerFunds while Clark, who runs his own firm called Kalytix Partners, is also a consultant to German industry pension fund MetallRente. He has often worked with Willis Towers Watson’s Roger Urwin on the governance of institutional investors.

The report was prepared with input from Carol Jeppesen, the US head for the Principles for Responsible Investment.They authors say that investor engagement and active ownership focus will expand from companies to public policy.

They write: “It is important to note that we do not believe that investors today are anywhere close to what they need to be in terms of active engagement on critical ESG issues, including climate change.

“There is a need for ‘forceful stewardship’ for both corporations as well as public policy officials.”

“We do not believe that investors are anywhere close to what they need to be in terms of active engagement on critical ESG issues.”

But Shah and Clark believe investors will ultimately develop the same “systematic, collaborative and, at times, forceful engagement” with policy makers on ESG issues as they have with corporations. On top of that, “new companies and organizations will be created to intermediate and channel those concerns in an organized way”.

They say: “Clients and beneficiaries of asset managers and owners will encourage active engagement with governments, at all levels, to ensure that public policy reflects investors’ underlying ESG concerns.

“We believe that a focus on public policy, in addition to corporations, is needed, given the interconnected nature of public policy and corporate behavior for issues related to sustainability.”