The responsibility for carrying out stewardship activities generally lies with the investment team, ESG/stewardship specialists, or a combination thereof. The modus operandi will depend on aspects such as the culture and size of the investor. Best practice would have you implement an integrated approach, with tight coordination and information sharing between teams. In this blog, we highlight dynamics and challenges in this collaboration, and solutions to effectively manage it.
Market insights
Growing market expectations are leading to increased scrutiny of investor stewardship practices. In an analysis of fund managers' compliance with requirements ahead of the now implemented UK SDR and Investment Labels Rules, the FCA found the approaches to investment stewardship did not meet the FCA’s expectations, with challenges including, for example, significant reliance on stewardship activities without being able to demonstrate how they set, assessed and monitored outcomes, and how these linked to the investment objectives of funds.
Separately, in a study of UK Stewardship Code signatories, investment consultancy firm Redington notes how there is much more work to be done by managers, especially regarding the inclusion of basic data points within their reports, which partly speak of a need for better systems to capture and report on efforts effectively across teams.
Challenge & Goals
Stewardship resources comprise multiple elements, including the staff engaged in related functions, data, systems, training, etc. Whether your organisation views stewardship as an intrinsic part of investee monitoring, or has a separate engagement program, similar decision-making and tasks apply to data management, coordination and reporting.
The challenge with creating smooth coordination and information sharing between stewardship and investment teams is often three-fold, and centers around people, data and processes:
investment staff have limited time and interest, and display varying knowledge about ESG and active ownership,
data is often siloed, residing in different systems,
lack of adequate knowledge-sharing structures, e.g., infrequent contact points and meetings, unstructured information sharing.
Your approach here will either empower teams, leading to better outcomes in your investment stewardship and asset management, or it’s a source of friction in day-to-day work and team collaboration.
From a data management perspective, improving this internal collaboration should entail creating purpose-built environments with integrations between different platforms for seamless data and information flows. As one portfolio manager told us,
“we need access to an overview that combines investee monitoring and investment stewardship efforts for analysis before company meetings”.
Esgaia’s solution
Esgaia’s engagement management platform empowers investors to centralise stewardship data, optimise workflows, and simplify reporting. About the aforementioned challenges, core use cases cover tracking and coordination across teams. With Esgaia, you can:
define specific objective and activity templates for different teams, to improve data recording and quality,
use system integrations and an Outlook plugin to enhance information access and workflow efficiency,
access tools such as analytics and notification features for better oversight and timely action.
Data management and integrations
Outlook Add-in (emails & calendar):
With our engagement management platform, investors can operationalise the workflow to improve the coordination between ESG and investment teams. As one of our clients commented in a separate case study, Rose Beale, Responsible Investment Lead, Findlay Park:
- “The platform was built by practitioners who really understand how effective engagement works, and the barriers to it. This was real differentiator for us. Esgaia has eliminated a lot of the frustrations, and given us more time to focus on engagement itself.”
We’d like to hear from you on this, so please reach out if you want to discuss and share your experiences collaborating with the investment teams.