Caroline Escott: “Investors, it’s time to treat public policy engagement as a core part of your stewardship strategy”

Investors are, rightly, vocal about the need for meaningful reform when it comes to system-wide issues such as climate resilience, labour rights, or cybersecurity. We recognise that these are not just company-specific risks, but systemic challenges that threaten long-term value creation across our portfolios. Yet, despite this growing awareness, our industry has arguably been too slow to embrace one of the most powerful tools for change available to us: public policy advocacy.

Historically, investment practitioners have focused their stewardship efforts on company engagement and proxy voting, and these remain vital to creating sustainable value in the interests of everyday savers. But we must now expand our business-as-usual stewardship toolkit to include policy engagement. System-level challenges demand system-level solutions, and that means engaging with the rules, regulations and frameworks that shape corporate behaviour, as well as the policymakers, regulators and standard-setters.

I have long argued that truly sustainable finance must be about more than allocating capital and influencing how it’s used at the company or asset level – it’s also about influencing the environment in which that capital operates. That’s why I worked with the ICGN to draft their Systemic Stewardship and Policy Advocacy Toolkit, which offered practical guidance for investors seeking to incorporate public policy into their stewardship strategies. 

Since the toolkit was published, there has unfortunately been a shift in global policymaking towards diluting corporate governance standards, removing long-standing shareholder rights and generally making it harder for investors to act as effective stewards of our assets and create long-term value. We’ve also seen some pauses or reversals of important climate and sustainability disclosure rules. 

Yet despite the growing urgency, many investors appear reluctant to dedicate sufficient resources to policy advocacy. This stands in contrast to the significant and ongoing efforts portfolio companies and their advisers make in lobbying and policy influence. Corporates routinely deploy C-suite executives, specialist teams and external consultants to shape the regulatory landscape, in addition to setting up dedicated think-tanks and funding research. Meanwhile, too many investor stewardship practitioners treat policy advocacy as a peripheral activity, if they engage at all.

This imbalance matters. If we want capital markets that support long-term, sustainable growth, we need a regulatory environment that reflects the interests of long-term investors and their beneficiaries. That means showing up – consistently and credibly – in policy debates, while thinking strategically and proactively about how to engage with policymakers.

I’m hopeful that we are starting to see signs of change. The recently launched Governance for Growth Investor Campaign (GGIC), chaired by Railpen and backed by some of the UK’s largest pension schemes, is one such example. GGIC is making the case directly to UK policymakers that strong corporate governance is not a barrier to growth but a catalyst for it. Working alongside key membership associations, it’s calling for a policy framework that empowers pension schemes to invest in ways that support both economic dynamism and saver outcomes. It’s exactly the kind of strategic, collaborative and proactive advocacy we need more of.

Of course, not all investment practitioners will be able to engage directly in public policy. Some may face constraints due to their official affiliations. Others may lack the dedicated resources to run policy and government relations teams or respond to consultations. That’s where our membership associations play a key role. Bodies like the International Corporate Governance Network, the Principles for Responsible Investment and, in the UK, Pensions UK and UKSIF represent our collective voice on the issues that matter most, and we can support them further, as members, by proactively involving ourselves in shaping and supporting their advocacy efforts. 

So, here’s my ask: if you’re an investor who cares about long-term value, it’s time to treat public policy engagement as a core part of your stewardship strategy. You can review your internal resourcing. Actively contribute to, and work with, your membership bodies. Collaborate with peers. Let’s work together, and step up.

Caroline Escott is Chair of the Governance for Growth Investor Campaign (GGIC)