Stewardship – Discussion
vote or engaging with companies or gov- ernments on regulation and policy.
What role does Cambridge Associates play when it comes to stewardship? Deborah Christie: On the manager research side, our role is to understand what people like Michael are doing in terms of engagement. How is it integrated into the fundamental analysis? Are they writing resolutions? Who are they collab- orating with to raise the bar? This helps us to understand where many of the bou- tique managers we cover could collabo- rate with like-minded investors to effect change. Our other role, as stewards of our clients’ capital, is to help them understand where engagement fits into their investment policy. We then help select managers who are active in engagement. We work with clients to craft policies or letter writing campaigns or figure out who to collabo- rate with.
We come at it from both sides. Everything we do is customised to a client’s interests and can range from social justice issues to climate to a just transition. Deborah Gilshan: One of my favourite quotes on stewardship is in Security Anal- ysis by Benjamin Graham and David Dodd: “The choice of a common stock is a single act; its ownership is a continuing process. Certainly, there is just as much reason to exercise care and judgement in being as becoming a shareholder.” We have to be careful not to make this something that is relatively new, because it is fundamental to good investing. The idea of a continuous process of ownership is an important way of thinking about this.
How receptive are companies to making big changes? Gilshan: Stewardship has its limits. Com- panies do not automatically do what you ask of them and we can’t keep engaging on an issue if they don’t respond.
Remuneration is a good example. It is fas- cinating that we have a system where, when shareholders vote down an advisory vote, the answer is more engagement. Why would I engage further on a pay plan I voted against because it is not in the interest of my clients? That is a systemic issue in the stewardship chain that we need to think about. Marks: Are companies willing to engage? Some are, some aren’t. We approach stewardship by looking at how we can engage with companies to help raise the bar across their sector and the country in which they operate. We have had some successes, which are not solely down to us because steward- ship is rarely an individual activity. In China, the government has set a 2060 net-zero policy. But through conversa- tions in the country, we have companies targeting net zero by 2050.
This is an example of shareholder steward- ship leading to an outcome that a company
Issue 125 | July-August 2023 | portfolio institutional | 39
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
