Good stewardship offers a vital tool to address environmental, social and governance challenges and promote sustainability as a driver of long-term value in the economy. Stewardship refers to the activities undertaken by shareholders to monitor, engage and intervene on matters that may affect the long-term value of investee companies. Such issues include strategy, performance, corporate governance, and environmental and social issues that may materially affect the future sustainability of companies and shareholder value.
A growing number of stewardship codes, such as the UK Stewardship Code and the Japanese Stewardship Code, aim to enhance the quality of engagement between investors and companies to help improve long-term risk-adjusted returns to shareholders. Other stewardship initiatives include Climate Action 100+, which seeks to engage with the highest-emitting companies around the world to drive emissions-reduction activities and a strategic shift to lower carbon business models.