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Incentivising long-term stewardship

Financial markets channel scarce capital to a range of companies to finance investment in productive activities. These in turn underpin economic growth. 

Several countries are currently grappling with how to improve the efficiency and social contribution made by their capital markets.

Following the global financial crisis in 2008, we believe several fault-lines were exposed in capital markets. Consequently, government efforts to improve markets by increasing transparency – ensuring a proper focus on clients’ long-term interests and tackling conflicts of interests – is welcome.

How can capital markets contribute more?

In addition to our commitment to the UK’s Stewardship Code, we are reaching out to policy-makers to help ensure that new guidance and laws to promote effective stewardship deliver results in practice. 

Key areas of activity include:

  • Contribution to the Kay Review of long-termism
  • Thought-leadership on fiduciary duty
  • Contribution to the debate over passive versus active management, and implications for long-term stewardship - as shown in this article in the Financial Times (subscription required)

Specifically, we are in favour of clarifying and strengthening the policy and legal context for asset managers to act as long-term stewards of their clients’ assets.