WHAT DOES EFFECTIVE STEWARDSHIP LOOK LIKE?

 A focus on effective stewardship helps ensure investors are accountable to those whose money they invest – their clients and beneficiaries.  

Effective stewardship:

• promotes sound investor and corporate governance through the adoption of business practices that lead to sustainable outcomes for our environment, society, and economy

• helps investors build trust between companies and other issuers, key stakeholders, and their community 

• encourages collaboration, and is most effective when asset owners, fund managers and other entities in the investment community work together, drawing upon an agreed set of expectations, and 

• enables investors to be clear about their expectations and opens the way for deeper consideration of material environmental, social and governance (ESG) matters. 

There is no single way to conduct effective stewardship.  An investor’s values, purpose, objectives, investment strategy and access to resources collectively influence their stewardship priorities, capacity and objectives. 

Applying the Stewardship Code in the legislative context

Signatories already have a duty to comply with relevant professional standards of care, and to exercise care, diligence, and skill when making investment decisions. 

Signatories may also have a duty to act as fiduciaries and to act in the best interests of clients and beneficiaries. The Code seeks to complement these existing legal obligations. 

Relevant regulatory requirements and guidance for investment managers and other financial services market participants managing assets include: 

• The FMA’s Managed fund fees and value for money Guidance (April 2021);

• the Code of Professional Conduct for Financial Advice Services (March 2021);

• the FMA’s Disclosure Framework for Integrated Financial Products Guidance (December 2020);

• NZX’s ESG Guidance Note (December 2020);

• the FMA’s Corporate Governance in New Zealand: Principles and Guidelines Handbook (2018);

• A Guide to the FMA’s View of Conduct (February 2017);

• the New Zealand Corporate Governance Forum Guidelines (July 2015);

• the Financial Markets Conduct Act 2013, particularly the “fair dealing” provisions in Part 2 and general duties applying to managers of registered investment schemes.

Investment managers and other financial services market participants will also, from January 2023, need to comply with new Climate Reporting Disclosure Standards (NZCS 1, 2 and 3). 

In some instances, the Code establishes higher standards than are required by current regulation or guidance and invokes stewardship expectations not specifically addressed by existing law. The Code does not purport to supplant or limit any existing statutory or common law obligations on Signatories. Signatories agree to comply with the Code alongside their existing legal obligations, which are not affected by the Code. 

This Code is consistent with existing industry principles and standards including RIAA’s Product Certification Standard and the United Nations Principles for Responsible Investment (UN PRI).