For institutional investors and companies, a perfect storm has been brewing for some time. It started with expanded proxy voting at company meetings and the growing influence and size of passive and index-based investors. This was shortly followed by more emboldened shareholder activists and the increased acceptance of using environmental, social and governance (ESG) factors in investment decisions.
However, it is the combination of these factors, with strong stewardship tailwinds from Europe, that is causing a capital markets sea change.
The owners of assets such as pensions, insurance accounts, sovereign wealth funds, endowments, foundations and family offices are increasing their demands on asset managers to embrace greater investment stewardship. This has led to the phenomenon of passive investors becoming long-term “active owners”, as opposed to the more traditional roles of active managers and activists.
By definition these passive investors do not have the option of selling stock, and so they are left with two choices. They can either meet their asset owner clients’ expectations around investment stewardship by engaging with the companies in which they invest, or risk losing their investment mandates to asset managers that will.
How has this change been felt?
Perhaps the heightened scrutiny and client demand is no better personified than by CEO of BlackRock Larry Fink. In his annual letter to CEOs, he calls for a new model of corporate governance – one in which companies address the fact that “society is demanding that companies, both public and private, serve a social purpose.” He goes on to say that “without a sense of purpose, no company, either public or private, can achieve its full potential… And ultimately, that company will provide subpar returns to the investors”.
If you prefer a more visual illustration of the seismic shift towards investment stewardship, it’s been pretty hard to miss State Street’s very public statement on Wall Street, literally and figuratively, over the last year.
What has the response been?
While the mainstreaming of investment stewardship is relatively new in North America and Asia, the experience observed in Europe and Australia over the last three decades indicates that demand is not likely to slow anytime soon. In fact, it is now fueling the global expansion of dedicated stewardship teams. BlackRock is among the largest, having grown to more than 30 members, closely followed by 20 at both Vanguard and Aberdeen Asset Management. US public pensions are also expanding their teams – there are currently 29 at CalPERS and 12 at CalSTRS.
For those more familiar with the corporate access side of the capital markets, these stewardship teams are also increasingly integrated into the buy side in the Americas and Asia, as observed earlier in Europe and Australia. They are now working alongside or in the same group as traditional investment analysts and portfolio managers, sharing meetings, company analysis, proxy voting and investment decisions on companies. In many investment stewardship teams, hiring is increasingly leaning towards professionals with traditional buy-side backgrounds. In BlackRock’s case, this has extended to hiring leaders in corporate access.
There’s no sign that this trend will slow down, with Larry Fink committing earlier this year to double the size of BlackRock’s team by 2021, and stating that “the time has come for a new model of shareholder engagement – one that strengthens and deepens communication between shareholders and the companies that they own.”
For companies, boards and executives, this means that, regardless of one’s personal or professional beliefs, investors are increasingly demanding that companies seriously consider, disclose and address what they are doing around governance and broader ESG concerns, and how this is aligned with corporate strategy and long-term returns. This stewardship wave is also impacting the role of investor relations, company secretaries, general counsels, executives and board members who are now spending more time doing governance roadshows, analyst days and calls on ESG issues and proxy voting matters with both investors and proxy advisors.
Indeed, as ESG-integration and investment stewardship escalate globally, we’re also seeing the rise of combined corporate access and governance roadshows by both companies and the buy side. This convergence of corporate access and shareholder engagement will only gather in pace, and if the changes in our user base and their behaviors suggests anything, it will do so on a global scale.
Manage all your meetings with companies or investors
Fueled by MiFID II and stewardship codes, the escalating demand for corporate access and governance meetings between companies and investors presents a clear need for technology to play a role. As the demand for and diversity of meetings rises, a tool that makes them quick and easy to schedule, and takes an intelligent approach to sorting through the noise in order to drive higher and longer-term returns on investment can prove itself invaluable.
This is partly why so many companies and investors are turning to Meetyl. Probably best known as corporate access on demand, Meetyl has quickly become the place for corporate governance and ESG engagements too.
As our user base grows, the pace and variety of events we support has continued to expand. In 2012, we started with non-deal roadshows for IROs. Today, whether a user is on the buy side, sell side or part of a company’s investor relations team, and wherever they are around the world, they can plan and execute successful investor days, analyst calls, earnings call-backs, conferences and marketing trips.
Now, combined with the deep governance and ESG expertise of Glass Lewis, we’ve developed a way for companies and investors to engage on corporate governance, ESG and broader investment stewardship concerns. More than 10,000 governance and stewardship professionals, thousands of investment firms and all of their engagement policies, biographies and voting behavior are available on Meetyl right now.
Book your next meeting in minutes
Leveraging thousands of live users from companies and investors around the world, along with their own imported contact lists, our users are automating and streamlining the targeting, matchmaking, scheduling, logistics and reporting of their corporate access and engagement activities.
If you’re on a buy side, sell side, investor relations or stewardship team, Meetyl can drive ROI while saving you time, money and headaches. If you’d like to know more, you can request further information and get a 30 minute-demo here.