PwC’s 2024 Stewardship Investor Survey

Regulatory developments, material issues and macroeconomic conditions drive stewardship focus areas 

Many investment stewardship programs generate themes that influence engagement topics and how they vote on shareholder proposals and management resolutions. 

To gain some clarity, we asked how influential nine factors are in the creation of stewardship themes. Almost all investors (95%) say regulatory attention has some or significant influence on their themes and focus areas.

Stewardship professionals tell us they would like to see enhanced corporate disclosure in certain areas

The relationship between companies and investors is grounded in corporate reporting. Disclosures — whether in the financial statements, another part of the annual report, the proxy or elsewhere — are a central way the company communicates how it operates. This is especially true of communication by the board, whose members shareholders elect to oversee management on their behalf.

Engagement meetings are dependent on aligning your agenda with when investors want to talk about it 

Asset stewardship teams have made it clear to us that access to board members is essential to their process. While nearly half (49%) of respondents say that over the last two years there has been no change in their ability to engage with board members, 19% say it has become more difficult, and 5% say they have not been able to meet with any board members over that period.

Asset stewardship investors consider many impacts on financial performance, and they may not be considered equally 

While investment stewardship teams spend considerable time analyzing governance issues such as board composition and director commitments, they also have a vested interest in understanding the risks that can impact the financial performance of their portfolio companies. 

Given the market volatility in the US, it’s not surprising that 73% of investors say the uncertain macroeconomic environment will have a medium or high impact on financial performance over the next three years.

The proposed action matters most when stewardship teams make voting decisions on shareholder proposals 

Over the past three years there has been a rapid rise in shareholder proposals with opposing interests on many ESG issues. It is useful for companies to understand how stewardship professionals are approaching the increasingly divided shareholder proposal environment when thinking about how to respond to a proposal. 

The resolved clause in the shareholder proposal is one of the most important factors in stewardship analysis ahead of a voting decision.

Stewardship teams consider a range of factors when approving auditor appointment 

The audit committee has direct responsibility for the appointment of the external auditor, setting the compensation and overseeing its work. 

Because material weaknesses occur infrequently, it is not surprising that 92% of investors say that the identification of such weaknesses in a company’s internal controls is a moderate or very important factor in determining whether to support the reappointment of an auditor when one is identified.

Conclusion

Our 2024 survey of asset stewardship professionals provides insights into the evolving engagement landscape as we approach two decades of expanded stewardship activity by investors.

PwC has long provided insights on key issues facing boards with our Annual Corporate Directors and Board Effectiveness surveys. This survey adds another layer of insights to the board, management and investor triad and we look forward to discussing this unique perspective with our clients.