Stewardship: a coming of age – Federated Hermes Limited

Increased oversight of sustainable investing may help combat greenwashing – but regulators will need to be aware of unintended consequences.

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... Investor stewardship is coming of age. Historically it has focused on encouraging disclosures and improvements in corporate governance. Critics might suggest that often this has led to company boards who have been risk averse in their capital allocation and virtue signalling in the way they have sought to meet the myriad of increasing investor demands, particularly around sustainability.

As the climate and technology disruptions continue to relentlessly manifest companies to be relevant for the future, they will need to invest and the returns of those investments will be far from certain.

As a result, investor stewardship will need to evolve and rather than act as a brake on investment in the risk averse way they hold company boards accountable, will need to work collaboratively with boards and empower them to invest for sustainable and profitable growth.

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