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Why Investors Should Prioritise Data Stewardship in Active Ownership

The growth in responsible investing has driven a surge in data and research, which in turn is leading to a greater emphasis on data management and governance. In this blog, we explain the importance of data stewardship, and why it should be a central component in strategy, with dedicated resources and performance metrics.

The age of data

We live in an era where data creation is growing exponentially and will continue to do so over the foreseeable future. There’s no escaping increased exposure to and utility of data, the only thing to do, really, is to embrace it. Similar to the emergence of AI, instead of looking at it with skepticism, instinctively dismissing much of it as AI-washing, we need to stay curious and think of how we can leverage it in our work. Of course, curiosity levels have increased exponentially since the launch of ChatGPT, which for many has been an eye-opener. For example, there’s a difference between data largely geared toward measuring compliance, versus data leveraged as an asset to achieve certain impact goals:

  • a recent McKinsey report on ESG governance within the banking sector, argues that banks “will need to adjust their data architecture, define a data collection strategy, and reorganize their data governance model to successfully manage and report ESG data”,

  • Deloitte, on considerations for insurance firms’ identification and mitigation of greenwashing risks, outlines one action as to “Develop a robust ESG data strategy and target operating model to improve the completeness and accuracy of ESG risk data”,

  • there are several initiatives such as the Industry Data for Society Partnership, the GovLab’s Data Collaboratives Explorer, and the Disclosure to Development Global Program, working to advance data stewardship and make it more accessible to promote social good.

Implications for investors

With continued growth in responsible investing, more and more data will need to be managed, which requires investors to prioritise data stewardship. As part of this journey, investors should also be thinking about information-sharing and disclosure efforts: ensuring accurate, timely access to information for internal usage, while producing high-quality, informative disclosures for external stakeholders can help enhance your practices and market influence. On that latter note, increasing transparency and disclosures are important components in serving the public good. However,

Institutional investors and asset managers are often not transparent about their investment strategies, their engagement policy and the implementation thereof. Public disclosure of such information could have a positive impact on investor awareness, enable ultimate beneficiaries such as future pensioners to optimise investment decisions, facilitate the dialogue between companies and their shareholders, encourage shareholder engagement and strengthen their accountability to stakeholders and to civil society.

Sounds familiar? The above paragraph is from the EU’s Shareholder Rights Directive (SRD II), which objective is to encourage and enhance long-term shareholder engagement and transparency between companies and investors in member states.

Thus, with evolving stewardship expectations globally, there are strong arguments for investors to improve their data stewardship and disclosure efforts. Which, in instances, as exemplified above, can help establish or promote structures where the data itself becomes an asset, such as vote declarations via UN PRI’s Resolution Database.

How can Esgaia help?

We believe solid data management is a prerequisite for high-quality asset stewardship. Esgaia becomes your engagement software partner, helping you save time and improve quality by centralizing engagement management in a cloud-based environment. As such, we become an extension of our clients’ IT capabilities, helping you better record, monitor and report on your investment stewardship.

Next step: Contact us for more information!

//The Esgaia Team


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