General Manager of Sustainable Investing Solutions Rebecca Hu makes the case for why she gets excited about stewardship.
General Manager of Sustainable Investing Solutions Rebecca Hu makes the case for why she gets excited about stewardship.
by Rebecca Hu
Why Investment Stewardship Should Matter to Investors
Investment stewardship is often viewed as a behind-the-scenes role, but it has significant influence over the direction of companies and the overall health of financial markets. For investors and asset managers, stewardship is increasingly becoming a key role in shaping their long-term outcomes. Let's explore some key reasons why investors should prioritize investment stewardship.
1. Improve Risk-Return
Stewardship allows investors to go beyond traditional financial metrics and identify sustainability factors that could impact a company's risk profile. By actively engaging with companies to address the issues they care about the most, investors can help mitigate risks and unlock potential value. For instance, companies that are well-managed in terms of climate risk or labor practices can perform well over the long term. Effective stewardship helps ensure that investors are aligned with these strategic priorities, leading to improved risk-adjusted returns.
2. Empower Clients
Investment stewardship provides a platform for investors to influence corporate behavior in a way that aligns with their values. For investors, this means taking an active role in shaping the future direction of companies they invest in. Whether it’s pushing for greater transparency in corporate governance or advocating for climate action, stewardship empowers investors to not just passively hold shares but actively guide companies toward the responsible and sustainable practices they desire. We’ve found that folding stewardship into a values-based approach to investing is beginning to resonate with clients.
3. Meet Growing Client Expectations
Investment stewardship also enables investors to address systemic risks that can affect entire industries or the broader economy. Climate change, income inequality, and data privacy are just a few examples of complex interconnected issues that no single company can tackle alone. By engaging with companies on these matters, investors can drive collective action to mitigate systemic risks that might otherwise threaten long-term returns. Furthermore, as expectations from stakeholders—clients, regulators, and society at large—continue to grow, investment stewardship provides a mechanism for investors to show leadership in addressing these challenges, ensuring that their portfolios remain resilient in a rapidly evolving landscape.
4. Risk Mitigation Through Accountability
Lastly, investment stewardship plays a critical role in promoting responsible business practices and sound governance by advocating for adherence to established codes and regulations. As governments and international bodies introduce new frameworks around ESG reporting, diversity, and corporate accountability, investors who engage in stewardship are well-positioned to guide companies in adopting these standards. By encouraging compliance with evolving best practices, investors help ensure that companies operate responsibly and in alignment with the regulatory environment, reducing risks of non-compliance or reputational damage.
Investment stewardship is far more than a passive activity. It’s a dynamic approach that allows investors to enhance value, shape corporate behavior, and address the systemic issues that will define future market conditions. By embracing stewardship, investors not only protect their portfolios but also contribute to a more sustainable, resilient financial system.
What’s a Rich Text element?
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
.png){kind=spacer}
Disclosures:
Ethic Inc. is a Registered Investment Adviser located in New York, NY. Registration of an investment adviser does not imply any level of skill or training. Information pertaining to Ethic Inc’s registration or to obtain a copy of Ethic Inc.’s current written disclosure statement discussing Ethic Inc.’s business operations, services and fees is available on the SEC’s Investment Adviser Public Information website – www.adviserinfo.sec.gov or from Ethic Inc. upon written request at support@ethicinvesting.com. Information provided herein is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Any subsequent, direct communication by Ethic Inc. with a prospective client shall be conducted by a representative of Ethic Inc. that is either registered or qualifies for an exemption or exclusion from registration in the state where a prospective client resides. Information contained herein may be carefully compiled from third-party sources that Ethic Inc. believes to be reliable, but Ethic Inc. cannot guarantee the accuracy of any third-party information.
Ethic Inc. does not render any legal, accounting, or tax advice. Ethic Inc. recommends all investors seek the services of competent professionals in any of the aforementioned areas. Ethic Inc. cannot provide any assurances that any investment strategies, simulations, etc. will perform as described in our materials. ALL INVESTMENTS INVOLVE RISK, ARE NOT GUARANTEED, AND MAY LOSE VALUE. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY.