Stewardship Tools Evolve to Meet Rising Demand
Maanch enhances stewardship platform as fast-changing expectations lead to new pressures on service providers to support collaboration.
The vital and expanding role of stewardship in reaching sustainable investment goals is prompting a step change in the technology deployed to support it.
One example is provided by UK-based stewardship solutions provider Maanch, which recently further enhanced its Engagement Tracker platform with the integration of Morningstar Sustainalytics’ stewardship data.
By incorporating Sustainalytics’ data into the tool, Maanch offers clients access to hundreds of engagement cases with issuers and related reports, voting recommendations, as well as insights on company meetings, all of which can help inform decision-making.
Darshita Gillies, Founder and CEO of Maanch, told ESG Investor that the partnership aims to improve supplier collaboration and transparency. “Generally, data and technology providers are quite siloed, but we want to help our clients eliminate data silos,” she said. “We want them to streamline how they manage their data so that their teams can better collaborate better and report more efficiently to give insights into how they’re managing their stewardship risks.”
A more streamlined approach is essential, said Gillies, due to the increasing emphasis given by institutional investors and asset managers, to achieving sustainability-related objectives through investee engagement. This includes joint initiatives, as seen by the launch of nature-related collaborative engagement initiatives Nature Action 100, the Principles for Responsible Investment, and the World Benchmarking Alliance.
“We think of stewardship as an evolving process, especially in asset management where it’s evolving quite fast,” Gillies said. “Managers are realising the previous ways of recording stewardship, which were primarily paper- or spreadsheet-based, do not work as the volume of engagement increases. They are finding that they need to have something more systematic in place.”
As well as technology helping to automate what would otherwise be a manual process of recording engagement activity, she added, it also can offer advanced insights to help asset managers navigate risk factors and deliver for their clients in a cost-effective way.
Maanch’s clients across Europe and the UK have £204 billion (US$265.3 billion) in collective AUM. According to the company, more than 15,000 ESG-related engagements have been created on the Engagement Tracker with more than 1,960 having been closed.
The partnership with Sustainalytics is intended to be the first of a number of collaborations with other data providers to augment Maanch’s stewardship offering.
Hanna Roberts, Senior Vice President of ESG Products and Stewardship Services at Morningstar Sustainalytics, said that the collaboration with Maanch will offer “greater transparency and actionable insights”, enabling clients to “enhance their engagement strategies and drive positive outcomes across the issuers they hold”.
Enhanced resourcing
Maanch’s Engagement Tracker platform was launched in June 2022, initially developed in collaboration with Swiss private bank UBP to trace the impact of engagements over time and monitor escalations that can support investment decision-making.
The tool lets users generate real-time reports aligned with frameworks including the UK’s Stewardship Code 2020, the Global Reporting Initiative taxonomy and the UN Sustainable Development Goals.
Gillies flagged the UK Stewardship Code as being a particular catalyst for the growth of investors’ and managers’ focus on engagement. The code currently counts 289 signatories, collectively accounting for £50.3 trillion in AUM.
The UK’s Financial Reporting Council formally announced its review of the code in February and outlined how it planned to reduce reporting burdens and streamline processes for signatories. A revised version of the code is due to published during Q1 2025, with a likely effective date in January 2026, having been last revised in 2019.
Gillies said that the revised code will improve clarity over stewardship reporting, as well as the data needed to support engagement.
While Gillies sees evidence that stewardship resourcing is increasing, research released by non-profit the Thinking Ahead Institute in May suggested it is building on a low base, with the industry average stewardship resourcing level standing at approximately 5%.
The institute said stewardship resourcing levels need to double overall, describing the lack of resources and data as major impediments to the effectiveness of engagement efforts.
Gillies said that demand from asset owners is key in driving the ongoing growth in stewardship focus. “They are requiring asset managers to give more examples about their stewardship,” she added. “The whole sector is needing to really galvanise around the process, and therefore we’re starting to see a lot of resources into stewardship.”
Growth areas
In response to rising demand, the stewardship technology space is becoming more crowded. During the summer, Swiss technology firm rezonanz launched an engagement tracker. Similar to Maanch’s tool, rezonanz’s solution looks to reduce the expense and resource-intensiveness of stewardship, as well as helping investors overcome data barriers.
Gillies said Maanch had seen increasing business from Australia and Canada, which shows interest in efficient stewardship processes is “not just UK- or Europe-centric”, with many firms in other jurisdictions interested in the tracker. “We have a strong pipeline of clients, and this has been the fastest year of sales in terms of uptake from asset managers,” she added.
There has also been an increase in stewardship interest from private markets investors. At the International Corporate Governance Network’s recent Global Stewardship Forum an increase in stewardship activity was predicted for the private equity sector, with general partners expected to conduct more sustainability-focused stewardship discussions with portfolio companies.
Meanwhile, the world’s largest asset manager, BlackRock, created a new dedicated stewardship team for its private markets business earlier this week to further its push into the area. Earlier this month, BlackRock completed the acquisition of investment fund Global Infrastructure Partners, which has more than 300 active investments with operations in more than 100 countries and will be supported by the new team.
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