What is stewardship?

Stewardship is the responsible allocation and management of capital by investors – including asset owners and fund managers – to create and preserve long-term value for current and future generations.  Stewardship also promotes sound investor and issuer governance, and business practices that lead to sustainable outcomes for our environment, society, and economy. 

Stewardship encapsulates the values of accountability, transparency, fairness, and responsibility.  Stewardship encourages investor accountability to those whose money they invest – their clients and beneficiaries – and improved long-term risk-adjusted returns.  Stewardship through the relationship between asset owners and asset (fund) managers is also important. 

Stewardship includes monitoring and engaging with issuers and holding them to account on material issues, including through voting, and then publicly reporting on the outcomes of these activities.  It also includes collaboration and advocacy to achieve sustainable outcomes. 

Stewardship by investors puts a focus on the long-term health of the capital markets, as it focuses on long-term value creation for current and future generations, and sustainable outcomes for our environment, society and economy.  For this reason, this Stewardship Code recognises the importance of incorporation of material environmental, social and governance (ESG) matters, and consideration of a Te Ao Māori worldview.


The core principles which drive effective stewardship are:

 
 
 

 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. 

 

Our collective journey towards better stewardship

The September 2022 version of the Stewardship Code is Aotearoa New Zealand’s first Stewardship Code.  As Founding Signatories improve and evolve the Code, it is expected the mechanisms for governance over the Code also evolve.  

Initially, Signatories will adopt the Code on a ‘Comply or Explain’ basis.  This is the most commonly applied form of soft law for inaugural Codes.  It allows Signatories to apply the Code in a manner most appropriate to their circumstances.  ‘Comply or Explain’ sets a higher bar than a voluntary code by virtue of the need for Signatories to explain reasons, robustly and publicly, for non-compliance (for example, because the Signatory does not have voting rights for a particular asset class, or that the Signatory is working towards complying with the requirement but does not fully meet that requirement at present, etc). 

As time progresses, application of the Code is anticipated to move towards ‘Apply or Explain’ and further to ‘Apply and Explain’.  ‘Apply or Explain’ approach assumes Signatories are already in compliance with the principles and are moving beyond a ‘tick the box’ approach and can more definitely describe more clearly how their stewardship practices are achieving the goals of effective stewardship. 

Signatories will adopt the regime standard in place at the time of their application (i.e., for those applying to be Signatories in 2025 they will be required to adopt ‘Apply or Explain’ as that is likely to be the standard).

2021 - CONSULTATION

  • Raise awareness

  • Industry buy-in and agreement

  • Code Development Committee

2022 - SETTING THE PRINCIPLES | COMPLY OR EXPLAIN

  • First Aotearoa New Zealand Stewardship Code for Responsible Investors

2023/2024 - LAYING THE FOUNDATIONS | COMPLY OR EXPLAIN

  • Code Adopters. Code Governance Committee

  • Signatories reports

  • Disclose Register

2025 - deepening the principles | apply or explain

  • Second Aotearoa New Zealand Stewardship Code for Responsible Investors

  • Inclusion of service providers, supervisors

2026 - embedding the behaviours | Apply or explain

  • Making stewardship meaningful and purposeful

  • Promoting cultural and structural change