In a year dominated by the stellar performance of seven technology innovators*, we saw a distinct cooling of the market’s obsession with ‘ESG’ (environmental, social and governance) investing.
Clamours against so-called ‘woke capitalism’ grew louder, with certain US Republican-led states initiating or threatening anti-ESG litigation.
More broadly, heightened geopolitical tensions added to the sense of discord. The war in Ukraine continued into a second year, and tragic events unfolded in the Middle East towards the end of the year. Yet again, we saw record-breaking temperatures, with catastrophic weather events exposing the dangers of ongoing political paralysis around climate change.
Far from leading us to move away from our stewardship commitments, this uncertainty underscored the importance of rigorous ESG analysis, thoughtful company engagement and proactive market outreach in our efforts to protect and enhance our clients’ capital.
It is our responsibility to be long-term stewards of capital; this is how we deliver on our mission to secure tomorrow for our clients.
In 2023, weak governance and labour and human rights risks embedded in supply chains remained priorities. We co-chaired the launch of a Net Zero Banking Standard, giving investors an important tool to engage with these crucial allocators of capital. We put the spotlight on the centrality of climate risk management for banks’ long-term capital strength. We continued to gain support from investors, regulators and companies for our calls to see material climate impacts included in companies’ financial statements.
Equally, the speed and overwhelming popularity of artificial intelligence (AI) development has pushed our work on ethical AI to the forefront. With so many companies pinning their hopes on AI
to boost their productivity and future returns, it is vital that this development happens in an ethical and responsible manner.
Closer to home, we welcomed the ongoing regulatory efforts in the UK and elsewhere to weed out greenwashing. In order to ensure our claims about responsible investing are fair, clear and not misleading, we have enhanced the way we keep track of, and report on, our stewardship activities, as well as the milestones and impacts we contribute to.
Added to this, we continued our focus on ethnic diversity. Through our leadership of the 30% Club UK Investor Group Race Working Group, we engaged with UK-listed companies to improve the
representation of people of colour in senior positions.
Enhancing our client reporting was a priority in 2023. Building on the launch of our client portal in 2022, we developed a bespoke client stewardship report to demonstrate the ESG profile and voting activity unique to every client’s portfolio, in addition to highlighting our company engagements. We also introduced additional disclosure of our voting activity and rationales on our website.
We hope this 2023 firm-wide stewardship report provides further evidence to our clients and other interested stakeholders that we remain committed to implementing the Financial Reporting Council's (FRC's) Stewardship Principles, not just to tick a box, but because we believe this ultimately will deliver better and enduring performance for our clients.
Read the full report here.
About the UK Stewardship Code
The UK Stewardship Code 2020 sets high stewardship standards for asset managers, asset owners and service providers. It defines stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries, leading to sustainable benefits for the economy, the environment and society.
The FRC requires all signatories to the Code to publish an annual statement showing the extent to which they have complied with the Code, detailing how its principles have been applied and
disclosing specific information. Our 2023 Stewardship Report serves this purpose, as well as meeting Shareholder Rights Directive II requirements and informing our clients and civil society
organisations about our stewardship activities in 2023.
*Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla
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