Climate change: Asset Owner Statement on Climate Stewardship
Our asset managers are our strategic partners in delivering our investment objectives. They are also a critical part of the investment eco-system and uniquely positioned to accelerate climate progress and build momentum for market change over time. We are, therefore, keen to ensure that they evolve stewardship efforts in a way that robustly addresses concerns around the systemic risks asset owners and beneficiaries face from climate change. This objective of alignment of interests spurred the Asset owner – Asset Manager ‘aligning expectations’ project.
Feedback from asset managers at the Brunel led Asset Owner-Asset Manager Alignment Roundtable in 2023, prompted the development of the Asset owner statement on climate stewardship. Co-authored by Brunel with the People’s Pension and Scottish Widows, the statement calls on asset managers to strengthen and evolve their climate stewardship approach in response to the imperative for climate action.
By providing clarity on asset owners’ expectations of managers to meet beneficiaries’ long-term interests, the statement is intended to be used as a resource to support managers in implementing these goals.
More than 25 investors, representing AUM of $1.5trn USD signed the statement and will use it to drive their engagement with managers during selection and ongoing monitoring.
The five principles that make up the statement build on existing industry guidance and best practise. They embed flexibility for asset owners to exercise independence in their decision-making accounting for a manager’s progress to date, pinch points and challenges in stewardship delivery.
• Industry/market and public policy engagement should be core to the climate stewardship proposition across asset classes
• Where permissible, asset managers should prioritise collaborative initiatives to achieve greater impact and embed efficiencies in engagement activities
• Asset managers’ prioritisation framework for company engagement should be rooted in a robust theory of change that delivers maximum impact
• A systematic approach to voting is imperative
• Stewardship function needs to be adequately resourced
The success of this statement will be determined by its effective use within the industry. This initiative is particularly relevant in an environment where managers are experiencing counter pressures to climate progress and need the ongoing support of their asset owners to build on their work in this area. We have had reassuring messages from our managers in support of this statement and expect this to contribute to its relevance in the industry.
Brunel will continue to promote and report on the dialogue, progresses and challenges on implementation in the next report.
