Download This PaperSustainable Finance and Stewardship: Unlocking Stewardship's Sustainability Potential
An edited version of the paper will be published as a chapter in Global Shareholder Stewardship: Complexities, Challenges and Possibilities (Dionysia Katelouzou & Dan W. Puchniak eds, Cambridge University Press, Forthcoming)
European Corporate Governance Institute - Law Working Paper No. 521/2020
38 Pages Posted: 12 May 2020 Last revised: 29 May 2020
Date Written: April 17, 2020
Abstract
This paper explores the role of investor stewardship against a background of broader efforts to improve the sustainability of financial markets. Stewardship codes, encouraging institutional investors to act as long-term, responsible shareholders, comprise an emerging aspect of contemporary corporate governance frameworks with important implications for sustainable finance. They have the potential to promote the incorporation of environmental, social and governance (ESG) factors into both financial and business decision-making. This paper examines the way in which 25 stewardship codes from across the world approach ESG integration and explores the possibilities for enhancing their impact on sustainability. It concludes that stewardship codes form an influential part of the overall network of regulatory instruments supporting sustainable finance. They help to secure transparency, accountability and a progressive interpretation of long-standing fiduciary duties that better balances the interests of all stakeholders.
Keywords: institutional investors, stewardship codes, sustainable finance, ESG, fiduciary duties, transparency, accountability, corporate governance
JEL Classification: G23, G30, G32, K22, N20, M14
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