The Unseen ‘Others’: A Framework for Investor Stewardship

Abstract Institutional investors, as stewards, exercise power on behalf of their clients/beneficiaries, and in doing so, regard a broader spectrum of ‘unseen’ others - end investors, investable assets, and the broader economy, environment, and society. This analytical framework reveals a crucial distinction: the interests of these unseen others may not align with those of the clients/beneficiaries on whose behalf investor stewards act. By introducing multiple stewardship relationships —client stewardship, end-investor stewardship, asset stewardship, and sustainability stewardship—this article develops a model of enlightened stewardship and addresses a key challenge: stewardship beyond client stewardship mainly operates outside the domain of hard law. The article advocates for stewardship codes to ‘crowd in’ enlightened stewardship, complementing regulatory frameworks and leveraging intrinsic motivations for responsible investment. Using the UK Stewardship Code as a case study, it suggests incorporating elements akin to section 172 of the UK Companies Act 2006 to provide essential clarity and guidance in redefining the purpose of stewardship.