2019 |
Thijssen, N. M. Y. Stewardship in the age of the new permanent owners Masters Thesis 2019. Abstract | Links | BibTeX | Tags: active ownership, engagement, ESG, ownership concentration, stewardship, The Big Three @mastersthesis{Thijssen2019,The rise of passive investing has led to the concentration of ownership in the hands of ‘The Big Three’, major asset managers that dominate the passive asset industry: BlackRock, Vanguard and State Street. This study analyses how the Big Three approach investment stewardship and what incentivises them to influence their investee companies to integrate the principles of environment, social and governance (ESG) responsibility. Based on expert interviews three central trends can be identified that contribute to an increase of the stewardship activities of the Big Three: increased investor appetite, growing regulation and the materialisation of ESG principles. Both private and public investors increasingly demand a growing ESG related stewardship role of the Big Three. Their inability to sell shares puts the Big Three in a ‘partner position’ with their investee companies, which contributes to the adoptation of an enhanced stewardship role. The stewardship strategy of the Big Three consists of three elements: monitoring, voting and engagement. Their engagement strategy can be characterised as event-driven with a focus on severe ESG underperformers. The Big Three are inclined to approach their investee companies based on a fundamentally positive thrust and adhere to a long-term perspective on the improvement of their ESG performance. However, the Big Three remain hesitant, potentially due to a fear for a regulatory backlash, to fully utilise their influential ownership position to push their investee companies to integrate ESG principles. |