In today’s fast-changing investment landscape, the importance of stewardship and engagement cannot be overstated. Success in stewardship demands dedication and thorough reporting on the outcomes of engagement efforts. This reporting shows the positive impacts on clients, consumers, the economy, and society at large. As stewardship increasingly emphasises outcomes and impact, the effectiveness of these engagement activities becomes key to demonstrating a manager’s investment stewardship skills.

Alignment with the UK Stewardship Code 2020 and UN PRI Standards

The UK Stewardship Code 2020, with its clear focus on engagement outcomes, mandates asset owners and managers to demonstrate the tangible benefits of their stewardship activities. Similarly, the UN PRI encourages investors to report on specific stewardship outcomes to showcase their commitment to responsible investment. This shift towards outcome-focused engagement underscores a broader imperative: asset managers must now demonstrate the tangible benefits of their stewardship efforts.

The challenge lies in clearly articulating and reporting outcomes and aligning them with the investment objectives. For stewardship teams looking to drive meaningful corporate changes, have a look at the Share Action’s latest escalation framework. It provides a structured approach to enhance corporate engagement, particularly in areas of corporate debt and listed equity. 

As the industry moves forward, the need for comprehensive and outcome-focused reporting mechanisms has become paramount. Expanding the stage for tools and platforms that can support asset managers in meeting these elevated standards.

^{Source: 2024 Reporting Framework: Overview and structure guide – FEBRUARY 2024}

^{The UN PRI Sustainability Outcomes (SO) module aims to help stakeholders understand if and how an organisation is taking steps towards sustainable outcomes connected to its activities, including setting targets and tracking progress.}

Introducing Issue Outcomes in Maanch Engagement Tracker

Stewardship team demands have never been greater, thus the value of a collective central resource available provides an important way to deliver stewardship outcomes. 

The recently released Issue Outcomes feature significantly improves the Maanch Engagement Tracker by allowing users to easily add and report the results of their engagement efforts. This feature helps in keeping detailed records of all stewardship activities, ensuring they meet their goals and have the desired impact. It also aligns with the 2020 UK Stewardship Code and UN PRI standards, proving its value in responsible investment management.

Documenting the specific impacts of stewardship activities can be challenging. Asset managers often find it hard to fully capture the outcomes of their engagements in a clear and detailed way. Additionally, the need for transparency and accountability is growing due to changing regulatory requirements. This may not be fully met by traditional reporting methods.

The Maanch Engagement Tracker addresses these challenges by providing a simple, efficient way to document, analyse and report on the outcomes of stewardship efforts. This not only meets regulatory needs but also improves the quality of engagement practices. Making asset managers stand out in responsible investment stewardship.

Operational Readiness: The Foundation of Technology-Driven Value

^{Source: Engagement Blueprint: Our vision for active ownership of listed assets at Schroders – January 2024}

Operational readiness is the cornerstone of maximising the benefits technology offers, particularly in the realm of engagement. Ensuring that the technology’s deployment aligns with strategic objectives and governance frameworks, is key to ensure an enhancement of engagement outcomes.

1. Specific and Targeted Objectives: Clear, well-defined objectives are essential for the successful implementation of technology in engagement processes. 

2. Strategic and Governance-led Objectives: Objectives should be strategically aligned with broader organisational goals and governance structures. This alignment ensures that engagement activities are relevant and contribute to the overall strategic direction and governance priorities.

3. Bespoke Engagement Approach: A one-size-fits-all strategy is rarely effective in engagement. Tailoring the engagement approach to fit the unique characteristics of the target company ensures that interactions are meaningful and impactful. 

4. Clear Leadership and Skilled Team: The success of engagement activities heavily depends on the leadership and the team’s competencies. Clear leadership provides direction and fosters a sense of purpose among team members. Moreover, having a team equipped with the appropriate skills and knowledge is vital for navigating the complexities of engagement and maximising the use of technology. 

5. Understanding and Leveraging Relationships: A prior relationship or cultural awareness of the target company can be a powerful asset in engagement efforts. It enables the team to approach engagements with a deeper understanding of the target’s context. This helps enhance the relevance and effectiveness of the engagement strategy. Technology can support this by providing insights into historical engagement outcomes and cultural nuances, informing better-prepared and more personalised approaches.

Delivering real change and tangible benefits

For asset managers, it provides a clear framework to demonstrate their engagement effectiveness and stewardship value. This can potentially distinguish their services in a competitive market.

For asset owners, it can make it easier to identify asset managers that offer a service aligned with their interests and objectives.

Clients benefit from enhanced visibility into how their investments are being managed and their societal and environmental impacts.

The broader society gains as Issue Outcomes contribute to a more sustainable and responsible investment landscape. This in turn helps drive positive change in corporate behaviour and promoting long-term value creation. 

Benefits of Tracking Engagement Outcomes

1. Evidence of Engagement Impact: The ability to document and report on the specific outcomes of stewardship activities provides concrete evidence of the impact these engagements have on investee companies. This detailed documentation ensures that asset managers can clearly articulate the value added through their stewardship efforts. Whether it be in terms of governance, environmental or social contributions. It is critical for asset managers to align engagement outcomes to their portfolio management and stewardship decisions, for them to continue gaining new investment mandates aligned with their clients values. 
   
   
2. Strategic Decision Making: By analysing the outcomes of various engagements, asset managers and owners can refine their engagement strategies. Focusing on areas that yield the most significant impact. This strategic approach enhances the overall effectiveness of their stewardship activities. This ensures that resources are allocated to initiatives that drive meaningful change.
   
   
3. Differentiation in the Market: In an increasingly crowded market, the ability to demonstrate a strong track record of effective stewardship can significantly differentiate asset managers and owners. By providing transparent and detailed reports on Issue Outcomes, firms can showcase their commitment to responsible investment and their capability to influence positive changes in investee companies.
   
   
4. Enhancing Competitive Positioning: Detailed outcomes reporting encourages a competitive environment where firms are motivated to enhance their stewardship practices continually. This competition not only elevates the standard of stewardship across the industry. It also provides clients with clear metrics to assess and compare the performance of different managers and owners.
   
   
5. Compliance with Industry Standards: The detailed tracking and reporting of Issue Outcomes facilitate compliance with regulatory requirements and industry standards . By adhering to these standards, asset managers and owners can ensure that their stewardship practices meet the highest levels of transparency and accountability.
   
   
6. Building Trust with Clients: Transparent reporting of engagement outcomes plays a crucial role in building and maintaining trust with clients. When clients can see the tangible results of stewardship activities, they are more likely to have confidence in the asset managers’ ability to manage their investments responsibly. This trust is foundational for long-term client relationships and can significantly contribute to client retention and attraction. 
   

Conclusion

In summary, the potential of Engagement Outcomes to transform engagement reporting and enhance stewardship effectiveness cannot be overstated. We encourage asset managers and investment professionals to explore the capabilities of the Maanch Engagement Tracker, particularly the innovative Issue Outcomes feature. We have designed this tool to support your efforts in meeting the heightened expectations of clients and regulatory bodies alike. Your insights are invaluable as we continue to refine and expand our platform to better serve the investment community. 

Week Ahead…

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