One highly effective way asset managers can win the trust and loyalty of asset owners in stewardship

As an asset manager with institutional investment clients, you are likely to be carrying out stewardship activities on their behalf. You're probably a signatory to the PRI and Stewardship Code, integrating ESG in the investment process, tracking and managing your growing stewardship activities, and spending huge amounts of time and resources on reporting to meet client and regulatory requirements.

If this was 5 years ago, you might have been one of a few asset managers nailing it. But today, you're competing with a vast number of managers claiming to be doing the same things.

So how can you differentiate yourself enough from every other asset manager to go that extra mile and delight existing clients — and potentially win more mandates?

One of the things you can do to truly stand out is this: offer to give your clients access to your underlying engagement data. And it's not complicated, because you should already have this information at hand.

Why asset owners need more than stewardship reports

1. Stewardship reports are great, but they are not client portfolio-specific

Stewardship reports have no doubt improved standards, but they are entity-level and focus on demonstrating and evidencing how the firm has applied the Code. As Hilkka Komulainen, Head of Responsible Investment at asset owner Aegon UK, noted in Responsible Investor, managers will often just point to their stewardship report when questioned on engagement: "The challenge with that is that it's not necessarily tailored to us as a client and our portfolio."

Diandra Soobiah of Nest has similarly asserted that the number of engagements an asset manager has conducted is the least meaningful data they can report to their beneficiaries. Quantity without context doesn't build trust.

2. Asset managers can prioritise quality engagement over information requests

Even where asset managers do provide portfolio-specific reporting, the depth of engagement data and insights can vary. Their most interested clients will want to interrogate this more deeply, diverting resource from the quality engagement that should be the priority.

3. Asset owners' resources are limited

Asset owners manage diverse portfolios, member needs, and reporting while grappling with resource constraints. With multiple managers vying for attention, they lack the bandwidth to sift through voluminous reports to join the dots on what risks their portfolios are exposed to — often resulting in back-and-forth emails and meetings requesting specific information.

4. Providing underlying data helps asset owners mitigate greenwashing

Asset owners have the difficult task of aggregating and synthesising the stewardship activities of multiple managers in their reporting. By providing more transparency and evidence of engagement activities, asset managers empower asset owners to report with more confidence on the sustainability claims in their portfolios.

Addressing the pushback

Pushback 1: "Our conversations are behind closed doors, and we don't want to jeopardise our engagements."

This implies mistrust of the client at the outset. Your clients have entrusted you to represent their assets because of your expertise. To mitigate legitimate concerns about sensitive data being used out of context, set out clear expectations on how information is used and formally agree this in the IMA or side-letters.

Pushback 2: "Every client wants different data points — it would be impossible to manage."

The way to overcome this is to understand why clients are asking for specific data points and to provide guidance on the best common denominator. At its most basic, engagement data can include: company engaged, date, type of interaction, content, engagement objective, who conducted it, who was engaged at the company, outcome, and next steps.

Pushback 3: "We don't have the resources or technology to meet this need."

The great news is such technology exists today. The Impactive Platform acts both as a best-in-class engagement management tool and a client portal to help investors collect, organise, and present stewardship data efficiently. Asset managers can create "private" and "client-ready" notes to ensure they remain in control of any sensitive data — a win-win that gives clients what they need and saves the asset manager time from manual reporting.

Conclusion

Embracing transparency through the provision of underlying engagement data not only differentiates asset managers in a crowded market but also fosters trust, empowers asset owners, and strengthens stewardship efforts. By leveraging available technology, asset managers can prioritise quality engagement whilst gaining efficiencies in reporting and client service.

Impactive's stewardship management platform was purpose-built for high-quality engagement tracking and ESG integration. Get in touch to learn more.