The International Corporate Governance Network is offering a toolkit for investors to address climate change and other ESG issues with more public policy activity.
The investor group representing a collective $77 trillion in assets launched its Systemic Stewardship & Public Policy Advocacy Toolkit on Sept. 25, noting that "for many investors, extending systemic stewardship activities to include public policy will be a new approach," it said in a release.
"Our hope is that in the years to come, public policy advocacy will be used more strategically, effectively and positively," it said, by focusing not just on risks and returns of individual holdings, but also systemic risks like climate change "that are global in nature" and impact long-term value creation for beneficiaries more broadly.
In its rationale statement, the toolkit said that as more investors become universal asset owners or managers tied to the global economy, "an optimal approach to portfolio risk management should consider the deployment of systemic stewardship strategies to understand and mitigate not only company-specific risks, but also system-wide risks presented by a range of challenges, such as climate change, biodiversity loss, global pandemics or wealth inequality."
The lead author of the toolkit is Caroline Escott, senior investment manager, active ownership, for Railpen, the in-house manager of the £34 billion ($41.6 billion) Railways Pension Scheme, London.
"System-level issues, like climate change, labor rights or cybersecurity, need system-level solutions. Effecting positive policy change is key to tackling these kinds of topics and this means that investors should be considering public policy advocacy as a priority stewardship tool, alongside more traditional mechanisms such as company engagement and voting," Escott said in the release.
ICGN Global Stewardship Principles that offer investors an international stewardship framework will be updated early next year, the organization said.