Hermes Investment Management, a prominent UK-based responsible investment firm, is advocating for the adoption of a German Stewardship Code. This call comes amidst a global trend towards codifying best practices for institutional investors in their engagement with portfolio companies. The push for a German code is particularly significant given the country's robust economy and the increasing importance of ESG (Environmental, Social, and Governance) factors in investment decisions. This article will examine the arguments for a German Stewardship Code, drawing on international experiences, particularly the evolution of stewardship codes in the UK and Japan, and considering the broader implications of a global shift towards more responsible investing.
Viewpoint: Stewardship Deserves a Return to First Principles
The core argument for a German Stewardship Code, and indeed for strengthened stewardship frameworks globally, rests on a return to first principles. Stewardship, at its heart, is about the responsible exercise of ownership rights by institutional investors. This goes beyond simply maximizing short-term financial returns; it encompasses a long-term perspective that considers the interests of all stakeholders – employees, customers, suppliers, and the wider community – alongside shareholder value. Many argue that current practices, even in jurisdictions with existing codes, often fall short of this ideal.
Professor Paul Davies' analysis of the UK Stewardship Codes (2010 and 2020) provides a valuable lens through which to understand this challenge. While the 2020 code aimed to strengthen expectations of investor engagement, Davies' research likely highlighted both its successes and shortcomings. His work probably explored whether the revised code successfully addressed criticisms surrounding its voluntary nature, the lack of robust enforcement mechanisms, and the potential for "greenwashing" – where companies make superficial claims about their ESG performance without meaningful change. The potential weaknesses identified in the UK context underscore the need for a carefully crafted German code that avoids similar pitfalls. A return to first principles means focusing on clear expectations, robust mechanisms for monitoring compliance, and a strong emphasis on the long-term value creation for all stakeholders, rather than solely focusing on short-term financial gains.
Impact of Stewardship Codes in the UK and Japan
The UK and Japan offer contrasting examples of the impact of stewardship codes. The UK's experience, as highlighted by Professor Davies' work, reveals a complex picture. While the codes have undoubtedly raised awareness of stewardship responsibilities and encouraged greater engagement by institutional investors, their impact on corporate behaviour and long-term value creation remains a subject of ongoing debate. The voluntary nature of the code has been criticized for limiting its effectiveness. Enforcement mechanisms are relatively weak, and the lack of standardized reporting makes it difficult to assess the overall impact.
Japan, on the other hand, adopted a more prescriptive approach with its Stewardship Code. While this approach has led to greater clarity and potentially stronger enforcement, it has also faced criticism for being overly bureaucratic and potentially stifling innovation. The Japanese experience highlights the challenge of balancing the need for clear guidelines with the potential for excessive regulation. A successful German Stewardship Code would need to learn from both the UK and Japanese experiences, striking a balance between clear expectations and flexibility to accommodate the diversity of investment strategies and corporate contexts.
current url：https://sfqgxl.k177t.com/all/hermes-fordert-deutschen-stewardship-code-82711