Key stewardship trends for investors in 2022 revealed

By Jon Bragg

February 09 2022
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Biodiversity and net zero are expected to be among the key themes this year.

Key stewardship trends for investors in 2022 revealed

Global active equity specialist Martin Currie has outlined key stewardship themes for investors this year, covering ESG, sustainability and responsible investing.

The firm identified biodiversity as one of its main focuses in 2022, with a number of significant developments said to take place.

“Biodiversity loss represents a real and tangible risk for business, and it is increasingly important that investors consider the potential impact that biodiversity loss might have on investee companies,” said Martin Currie head of stewardship and ESG David Sheasby.

Mr Sheasby predicted that biodiversity would become increasingly prominent as an issue intertwined with climate change.

“Encouragingly, we are seeing biodiversity initiatives emerging that mirror the extensive work that has already been done on climate change,” he said.

“We are moving to a consistent and comprehensive framework for organisations to report on nature-related risks within mainstream corporate reporting.”

As for climate change, Martin Currie expects it will continue to gain prominence along with the transition to net zero.

“COP26 increased the sense of urgency around addressing climate change and there is now real momentum in investor-led initiatives, such as the Net Zero Asset Managers Initiative, of which Martin Currie is a part,” Mr Sheasby said.

“There is plenty of work for investors to do to assess the extent to which companies are aligned to net zero. Engagement will increase as a key tool.”

Martin Currie also flagged progress in the development of sustainable reporting standards following the establishment of the International Sustainability Standards Board (ISSB) last year.

According to the firm, the strong flows into ESG and sustainable funds seen last year are set to gather pace in 2022, with support from regulatory changes in Europe, the United Kingdom and the United States.

Additionally, Martin Currie expects the “S” in ESG to receive greater attention this year as social awareness increases, including additional focus on diversity, equity and inclusion.

“These are key social issues that are taking on greater importance for businesses and investors,” said Mr Sheasby.

“Active asset owners will increasingly identify potential challenges and work with companies to address any shortcomings. There is a growing belief in the investment management industry that outcomes should go beyond alpha and improve lives.”

The firm also pointed to proxy voting with purpose as a key trend in 2022.

“Investors will scrutinise company climate transition plans with greater attention and will vote ‘consequentially’ on transition plans or for the director responsible for these plans,” Mr Sheasby said.

“Shareholders will increasingly use their voting rights to push for action across the whole ESG agenda.”

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