The deliberate deployment of rights and influence (beyond capital allocation) to protect and enhance overall long-term value for clients and beneficiaries, including the common economic, social, and environmental assets on which their interests depend.
Exercising influence
As shareholders, lenders, and owners of real assets, investors have legal rights and other means of influencing the behavior of investees and other parties, such as policymakers. The ability to exercise influence spans asset classes, although the means to do so vary depending on the context.Examples of ways in which investors can exercise their rights and influence include the following:
- Serving on or nominating directors to a company’s board
- Filing shareholder resolutions or statements
- Voting on proposals at shareholder meetings
- Engaging with investees and potential investees
- Litigating
- Providing input into industry research, market standards, public discourse, or policy and lawmaking
- Actively participating in third-party or collective initiatives that undertake any of the above
The concept of overall value for clients and beneficiaries is multifaceted. It includes the market value of the entire portfolio (as opposed to individual holdings or individual mandates); the long-term value-creation capabilities of firms and economies; and the common environmental, natural, intellectual, social, and institutional assets that underpin all economies.
Examples of environmental assets include a stable climate, or an aquifer’s freshwater resource.
Examples of social assets include a population’s health, skills, and economic participation and institutions that undertake research and development for the public good.
Stewardship and long-term value
Investor influence does not constitute stewardship unless it is used to protect and enhance overall long-term value for clients and beneficiaries. Using influence to promote short-term performance or the performance of individual companies, industries, or markets, without regard to overall value, does not constitute stewardship.
The deliberate deployment of rights and influence (beyond capital allocation) to protect and enhance overall long-term value for clients and beneficiaries, including the common economic, social, and environmental assets on which their interests depend.
Exercising influence
As shareholders, lenders, and owners of real assets, investors have legal rights and other means of influencing the behavior of investees and other parties, such as policymakers. The ability to exercise influence spans asset classes, although the means to do so vary depending on the context.Examples of ways in which investors can exercise their rights and influence include the following:
- Serving on or nominating directors to a company’s board
- Filing shareholder resolutions or statements
- Voting on proposals at shareholder meetings
- Engaging with investees and potential investees
- Litigating
- Providing input into industry research, market standards, public discourse, or policy and lawmaking
- Actively participating in third-party or collective initiatives that undertake any of the above
The concept of overall value for clients and beneficiaries is multifaceted. It includes the market value of the entire portfolio (as opposed to individual holdings or individual mandates); the long-term value-creation capabilities of firms and economies; and the common environmental, natural, intellectual, social, and institutional assets that underpin all economies.
Examples of environmental assets include a stable climate, or an aquifer’s freshwater resource.
Examples of social assets include a population’s health, skills, and economic participation and institutions that undertake research and development for the public good.
Stewardship and long-term value
Investor influence does not constitute stewardship unless it is used to protect and enhance overall long-term value for clients and beneficiaries. Using influence to promote short-term performance or the performance of individual companies, industries, or markets, without regard to overall value, does not constitute stewardship.
