Discussion – Stewardship


We have fired manag- ers who are failing to take material risks or opportunities into


account. Jen Bishop


Deputy CIO and head of responsible investment Coal Pension Trustees


Sometimes when a group of investors are engaging, a company gets defensive. It is then best to have those nuanced con- versations one-to-one with a senior execu- tive to find out what is happening within the business and how you can help. Gilshan: There are a lot of great compa- nies out there. Stewardship is about checking in and creating a long-term trustful relationship. But we have to acknowledge that not all companies are managing the transition or are diverse, and investors tend to focus on the ones where the most engagement is needed. Stewardship, for me, is that long-term trustful relationship between investors and a company such that difficult conver- sations can be had and hopefully compa- nies will respond. Chapman: That’s a good point. It is also good to change the tone of the conversa- tion, which can sometimes be negative. For example, it feels combative when you are talking about the number of share- holders who voted against Shell’s chair at the AGM.


There are positive conversations with companies, but they do not always come out when you are getting reports about how unhappy chairs are that nobody is knocking on their door to discuss the issues. Marks: We want partnership-type conver-


42 | portfolio institutional | July-August 2023 | Issue 125


sations with the companies in which we are invested on behalf of our clients. There are also topics which we want to bring to their radar. Roll back six or seven years, when we started our climate impact pledge, every- one was talking about the issue, but com- panies were not doing anything about it. There is another issue which I do not believe companies across many sectors are paying attention to. It is financially material and is critical to our health: anti- microbial resistance. We need more companies to think about it. We are talking to the World Health Organisation and the UN as much as we are to pharmaceutical companies, water companies and food companies. It is shocking that prophylactic antibiotics are used in the food chain, weakening our resistance to diseases. The economic impact could be trillions of dollars if we find ourselves in permanent lockdown to protect us from a wave of diseases that we cannot treat. Gupta: This goes back to what the role of an investor is. Fundamentally, it is to have that supportive dialogue and engender change. Don’t start with an antagonistic tone. It has to be one of togetherness. It is about collaboration, it is about the long term, but showing where to go next if there is not that clarity of mind.


At a fundamental level, it is about under- standing the other side of the table. Every- body is on the hamster wheel of business as usual. They have to deliver what is in front of them and we are asking them to think about these deep issues that are entrenched in society that no organisa- tion has an answer for. In a practical sense, there is only so much bandwidth even the senior leaders have. It is all about culture. How do the senior executives look away from busi- ness as usual and start looking at the next five years, the next 10 years. For example, the whole concept of anti-mi- crobial resistance and biodiversity are not even on their radar. Their current challenge, a big one, is getting to net zero and that needs considerable, and yet non-negotiable, effort. Gilshan: I have attended many AGMs and spent most of my in-house career work- ing for smaller investors in terms of their assets under management, so it is about efficiency, how best to get a message out. Making a statement at an AGM on diversity or executive pay is not only a signal to the individual company but also the market- place, as you cannot cover every company. Marks: On the point about getting your voice heard, we can do that just as well on the positive side. You can name and shame or name and fame.


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