The Investment Association (IA) has today published a report to realign the role of stewardship and chart a pragmatic path forward for participants across the investment chain.
The report, titled Realigning Stewardship: Delivering Sustainable Value Through Stewardship, examines the barriers to practising stewardship from the perspective of investment managers, and sets out the evolution needed to support long-term value creation and deliver positive outcomes for clients, by working with stakeholders from across the investment chain.
Stewardship sits at the heart of a well-functioning investment ecosystem, underpinning both the generation of sustainable investment returns and the long-term stability of markets. However, in recent years, the stewardship framework in the UK has faced scrutiny regarding its impact on economic growth and international competitiveness. This includes how it delivers for both end-savers and companies, the reporting burden for participants across the investment chain, and the perceived impact on the attractiveness of UK listings.
Having reviewed stewardship practises and expectations, this report offers a series of targeted recommendations designed to realign practices across the investment ecosystem and empower stakeholders, including policymakers, asset owners, and investment managers, to act as partners in the next phase of stewardship. These recommendations look to address a range of challenges, including: the realistic assessment of what stewardship can achieve, the integration of stewardship into the investment process, and the promotion of the full range of mechanisms for stewardship.
The 10 recommendations are as follows:
- Embed stewardship into mandates and relationships between investment managers and asset owners to set realistic expectations about what stewardship can deliver for client objectives.
- Ensure transparency with clients about the potential impacts of specific investment objectives—particularly where these may limit the investible universe, require time horizon trade-offs, or affect returns.
- Encourage clients to articulate the type of stewardship that aligns with their investment objectives—whether focused on financially material company level issues or broader systemic themes and portfolio level risks and opportunities.
- Shift stewardship oversight toward assessing outcomes linked to value creation rather than activity-based metrics (such as number of engagements or votes against).
- Enhance stewardship reporting by including best practice case studies that illustrate when and how voting is used, and how voting works alongside other stewardship tools.
- Provide fund level transparency at the pre-appointment stage on how stewardship supports the fund’s investment strategy.
- Promote industry consistency by sharing best practice examples on the integration of stewardship into the investment process from the first round of reporting under the new Stewardship Code and encouraging the industry to speak with a single, coherent voice on key issues rather than having differing portfolio management or stewardship views.
- Reframe regulation and reporting to focus on delivering stewardship outcomes rather than activities.
- Increase Investment Consultant transparency on how they support good stewardship outcomes and help clients meet their Stewardship Code objectives.
- Better articulate the cost and value of stewardship reporting to ensure it provides decision useful information for clients.
Andrew Ninian. Director, Stewardship, Risk & Tax, said: “The investment industry has reached an inflection point regarding the role and value of stewardship. The report highlights a number of challenges that the investment management industry is experiencing when conducting stewardship on behalf of clients.
“The practical recommendations identified in our report empower stakeholders — including policymakers, asset owners, and investment managers — to act as coalition partners in stewardship’s next phase, one in which clarity of purpose prevails over box-ticking and stewardship is positioned as a critical tool for informing the investment process and driving long-term value.
“Looking ahead, fostering effective stewardship practices and outcomes requires all stakeholders across the investment chain to work collaboratively, aligned with the common goal of sustainable value creation for the end-saver.”
Miranda Beacham, Head of UK Responsible Investment, Aegon Asset Management and Chair of the IA Stewardship Committee, said: “It has been a valuable opportunity to engage with like‑minded peers across the industry on the topic of stewardship and to collaborate on a paper that will help shape future discussions among stakeholders. Our aim is to initiate a dialogue that can continue over the coming years, strengthening stewardship practices and supporting the development of a resilient and thriving UK economy. “
