A model framework for “Active Investor Stewards”
– Well-known experts offer a model for active investor stewardship
– The model explains the various roles of the players and advisors
Love this piece from Bob Eccles, Aeisha Mastagni and Kirsty Jenkinson about “Activist Stewardship.” It explains how “universal owners” – those investors too large to sell a company’s stock – have to become active so they can persuade companies to change their ESG strategies (the ones who refuse to budge, known as “Corporate Castles”).
It’s a great piece worth reading in full, it’s not too long. Here is an excerpt from the piece:
While still in the early stage of development, the model for activist stewardship contains the following elements:
• The lead investor who identifies the target Corporate Castle. This will require identifying a small set of companies in any given industry that are likely candidates and then determining which one is best for the campaign. This will require extensive analysis and funding for this may be required
• The army of investors (could be few but mighty) who will support attacking the castle walls. Ideally this will include some of the largest asset managers and perhaps a hedge fund or two
• NGOs and other stakeholder representatives who can be marshalled to apply pressure
• A funder source to provide the resources to develop the holistic approach. Initially this could be foundations, and this will be very bespoke by their interests. Eventually it would be good to have a permanent source of capital where there is broad discretion in how it is applied. Perhaps find a hedge fund manager looking for redemption.
• The organization to do the financial analysis and partner on developing the holistic approach.
• The law firm(s) for the necessary legal work
• The executive search firm(s) for identifying the slate of new executives and directors
• The appropriate media outlets who can amplify the message
Also see this note from Nawar Alsaadi with his “Ultimate Active Ownership Guide”…