The Investment Consultants Sustainability Working Group (ICSWG) has launched a new tool designed to help asset owners ensure their investment managers’ investment stewardship activities are in line with their own expectations.

Its Investment Stewardship Alignment Tool will look to help asset owners in testing and assessing investment managers’ investment stewardship processes and the extent to which they are aligned with what they expect.

The ICSWG said this would principally be achieved by referencing their own responsible investment beliefs and stewardship expectations, and comparing them to the voting and engagement activities of their investment managers.

ICSWG co-chair and Isio head of sustainable investment, Cadi Thomas, noted that, as regulation and market practice around investment stewardship evolved, asset owners were facing increasing expectations that stewardship activities were meaningful, well-governed, and aligned with their fiduciary duties.

“The new ICSWG tool provides a structured framework, using a practical flow chart that guides asset owners through an assessment of their managers’ proxy voting decisions and engagement activity, and determines how closely those resonate with their own investment stewardship beliefs and approach,” Thomas stated.

LCP head of responsible investment, Claire Jones, highlighted the 2024 paper by the Financial Markets Law Committee about fiduciary duty, which stated that pension trustees would want to have processes for the proper communication of their stewardship expectations and oversight of investment managers’ work to reassure themselves of its effectiveness in mitigating risks and supporting returns.

“The ICSWG tool is designed to help trustees with this monitoring process through helping them assess and improve the alignment of their investment managers’ stewardship with their own expectations and beliefs,” Jones said.

Aon sustainability research lead, Mette Charles, added: “The Asset Owner Investment Stewardship Alignment Tool is designed to bring greater clarity and structure to conversations between asset owners and their investment managers.

“By focusing on voting and engagement in an applied way, it helps asset owners assess whether stewardship activities are genuinely aligned with their own beliefs and expectations and provides practical suggestions where gaps emerge.”

---