Fragmentation in stewardship approaches and misalignment between asset owners and managers are creating inconsistencies in engagement and voting strategies, according to the latest report published by Pensions for Purpose.
Sponsored by Robeco and in partnership with Border to Coast, IGG and TPT Investment Management, the report – Systemic stewardship – challenges & strategies for change – identifies an inconsistency in stewardship approaches across asset owners, with significant variations in voting, engagement and accountability. Smaller funds, in particular, struggle with resource constraints, making it difficult to implement structured stewardship programmes effectively.
Ensuring asset managers adhere to asset owner priorities continues to be a major concern. Some asset owners report significant discrepancies between their intended stewardship objectives and the actual voting behaviour and engagement strategies executed by managers, leading some to conduct voting internally or through a third-party. Asset owners are also increasing the robustness of their assessment of managers’ stewardship efforts. However, the lack of rigorous oversight mechanisms exacerbates these challenges, making it difficult for funds to maintain alignment with their long-term investment principles.
The report, therefore, called for stronger governance and accountability, urging asset owners to align their stewardship strategies with systemic risks. Structured oversight and clearer communication with asset managers are seen as critical to improving accountability and ensuring stewardship efforts translate into long-term positive impact.
Collaboration is highlighted as an essential tool for overcoming resource constraints and amplifying investor influence on systemic issues. By participating in industry-wide initiatives, asset owners can pool their expertise and resources to drive change on pressing matters such as climate change, biodiversity and broader social governance concerns.
The research, based on 21 in-depth interviews with UK-based asset owners, trustees, investment consultants and others, found several challenges and opportunities for asset owners seeking to enhance their stewardship strategies.
Richard Giles, senior director and community lead at Pensions for Purpose, commented: “The report highlights the importance of systemic stewardship in managing long-term risks. Asset owners must take a proactive approach by strengthening governance, ensuring alignment with asset managers and engaging collaboratively at an industry level.”
While challenges persist, the report also highlights promising developments in stewardship, showing progress is being made in key areas.
More asset owners are asserting control over stewardship priorities, directing asset managers and refining engagement strategies to achieve real-world impact. Industry-wide collaborations are increasingly recognised as effective mechanisms for addressing systemic challenges. Finally, investors are recognising the need to combine direct company engagement with broader policy advocacy to drive meaningful change.
Peter van der Werf, head of active ownership at Robeco, added: “With growing sustainability risks from climate and biodiversity for pension funds in a complex geopolitical environment, we encourage asset owners to enhance their stewardship efforts. Aligning accountability and consistency in engagement and voting by their asset managers will help to deliver this commitment to their beneficiaries.”
