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Demystifying stewardship How is it really done?

Anastasia Petraki

Head of Policy Research

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In a world where the word “sustainability” features everywhere and is in everyone’s mind, the word “stewardship” seems almost old-fashioned. We think it is anything but. We view stewardship as an inseparable part of investment and essential to properly implementing sustainability, particularly in a forward looking way. That is why it is important to be clear about what it is and how it is done day-to-day. In this paper, we bust ten of the most common myths around stewardship and set the record straight for how Schroders holds companies to account.


Financial news is dominated by sustainability and concerted actions to tackle climate change through investment. Meanwhile, stewardship and how asset managers act as owners of companies is somewhat taken for granted. In a way, this could be a good thing as it may indicate that stewardship has become mainstream. But it could also indicate complacency. If the market now recognises it (or at least more so than it did before the Global Financial Crisis) there is not much need to worry about it.

That is not to say that stewardship is no longer subject to debate. It is rather that the nature of the debate has shifted. The question has evolved from whether stewardship happens in the first place to what outcomes it achieves and how it relates to companies’ purpose. This can be seen, for example, in the second edition of the European Shareholder Rights Directive and the amended version of the Stewardship Code in the UK.

For those who have truly believed in stewardship, this shift will not change the way they exercise their responsibilities. Practices are the result of years of experience. Broader discussions sometimes overlook or forget to consider what this experience looks like. In such a complex area where the most important part is the doing, this risks skewing the narrative towards entrenched views and common misunderstandings. In this paper, we identify ten such misconceptions or “myths” about stewardship and explain how Schroders is and remains an active owner of companies.

Myths about stewardship

  1. Stewardship is a compliance exercise
  2. Stewardship is all about shareholder primacy
  3. Stewardship varies across holdings of the same company
  4. There is a ”typical” way to engage
  5. Engaging is about escalating
  6. Divestment is the only way to affect real change
  7. Voting against company management is the only proof of an engaged investor
  8. Stewardship is run separately from investment
  9. Sustainable investment is not about stewardship
  10. Stewardship is opaque and takes place behind closed doors


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