Tomorrow's Company has played an important and leading role in developing the argument for stewardship, and in so doing has helped to create the conditions which have led to the establishment of the Stewardship Code in the UK. 
 
We are now building on this impact, to establish a new momentum for stewardship and understanding of what this means in practice - by tackling both the demand side (setting out  'Why Stewardship Matters' and developing toolkits to help each participant in the system to be more effective in their pursuit of stewardship) and the supply side (working with fund managers, investment consultants and FRC to develop the “stewardship spectrum” and establishing criteria through which excellence in stewardship might be identified and rewarded in the market)
 
In addition we want to show 'Why Stewardship Pays' - responding to the challenge that we help demonstrate the impact of stewardship on performance and the bottom line.
 
This argument will be familiar to some, and is frequently made by those seeking to demonstrate the financial impact which results from taking Environmental, Social , Ethical and Governance (ESEG) factors into account.  As one of our academic partners put it to us recently:
“There are more than 100 studies that have addressed this topic one way or another and what one can conclude from all of them is that ESG factors (variously defined) are often positively correlated with financial performance; frequently neutral; and infrequently negatively correlated.   Thus, although the balance of evidence is neutral to positive, there is no ‘generalisability’ and hence smart fund managers usually disregard 'sustainable stocks' or 'sustainable indices' except perhaps as extra indicators of management competence”
From discussions with investors, regulators, academic institutions and others – including Government – there is a shared interest in the proposal we have developed for Why Stewardship Pays.  The key elements of the programme are summarised in further detail below.

We would create a one stop resource with extracts of the many studies that have been undertaken. These extracts would be peer reviewed, and enable broad conclusions and comparisons to be drawn across very different data sets, time periods and areas of study.

A short document will be produced summarising the thematic conclusions of these studies but rather than attempting to prove the impact on financial performance looking backwards, the argument will be set within a strategic risk framework looking forwards – a toolkit will also be produced to help investors and also companies to take account of these factors in shaping investment and other decisions.

In so doing the document will challenge the narrow mindset which informs traditional calculations of value – and instead argue that long-term and sustainable value requires creating economic, human and social, and environmental capital. 

Tomorrow’s Company argues that we need to understand the complex interdependency of the economic, social and political and environmental sub-systems (we call this the ‘The Triple Context’) which together shape life and wellbeing, and will drive value creation in the future: strategic risk can only be reduced by taking these fundamental value drivers into account.

The content of Why Stewardship Pays would be developed by a consortium which would include investors, regulators, academic institutions from across the world, and leading experts.

Why Stewardship Pays - programme outline

The case for stewardship needs to demonstrate whether and how taking into account long-term and broader value drivers benefits performance and improves the bottom line. We propose to respond to this challenge by summarising the many reports that are available and working with leading practitioners and experts to produce forward-looking and risk-based outputs that help implement and push stewardship forward.
 
The programme will operate on 6 progressive tiers (also see diagram below).
 
Tier 1 and Tier 2: Gathering, analysing & sharing
 
The debate on ESEG (Environmental, social, ethical and governance) criteria is extensive, yet the case for stewardship lacks a single, accessible source of reference which synthesises the plethora of studies to date and gives confidence to those who argue for it.
 
This is an important task but evidently complex. Much of the data does support the argument that stewardship pays, however, there is room for legitimate debate around causality. Furthermore, not all the data supports the benefits of stewardship providing fuel for the naysayers – but again, there are arguments to be had about the quality of the data itself.
 
There is a convincing argument to be made in relation to strategic and systemic risk for boards and investors. This moves discussions away from “what can you prove?” to a more forward-looking “on what basis do you form key judgements?”
 
We are creating abstracts, following a common framework, of these studies, and will make them available as a web resource on forceforgood.com.
 
Tier 3: Learning & co-creating
 
Following from this, we will convene investors, government bodies and academics to discuss this data and build a common understanding around the learnings that exist.
 
Tier 4 and 5: Creating a point of view
 
The synthesis of this dialogues  will lead to the creation of a risk-framed toolkit for boards, investors and other decision-makers.
 
Tier 6: Communication & engagement – changing minds and mindsets
 
The programme’s outputs will be communicated and engage audiences with the aim of changing their minds.
 
 
 
We will bring together key players in this space to co-create this toolkit as a multi-branded proposition. Our current partners on the programme include:
 
- investors: we are in advanced stages of discussion with a number of major investors which we will be able to confirm shortly, and which we will brief you about in person;

- regulators: the Danish Government Centre for CSR, which will translate the materials into Danish to support businesses responding to their recent legislation;

- academic institutions: including Plymouth Business School and the Unit for Corporate Governance, University of Stellenbosch Business School, South Africa
- and leading experts and others.

Should you wish to support this programme in any way, do get in touch with Luisa: luisa@tomorrowscompany.com

We do think that this programme  is of great value, in terms of learning; developing and implementing new tools for decision making; branding, reputation and positioning.