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Stewardship and responsible investment report

Our approach to stewardship and responsible investment - engagment, research, voting and how ESG was applied to our investment decisions in 2023.

“We pride ourselves in being good stewards of our clients’ capital. It is core to who we are and a distinctive feature of our investment principles.”  Ashley Hamilton Claxton, Head of Responsible Investment

Download our 2023 report

Highlights from 2023

As responsible investors and good stewards of our clients’ capital, we actively promote strong governance and forward-thinking environmental, social and governance (ESG) practices across our assets.

Our engagement, research, voting and advocacy helps to add value and meaning to our investment decisions and, over the long term, help us deliver better returns for our clients and customers.

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Net zero

We engaged 223 companies on climate in 2023, with 36 selected for further engagement to promote meaningful action on net zero.
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We collaborated with Bloomberg to integrate ESG factors into commodity investing, helping create the world’s first carbon-tilted commodity index and exchange traded fund.
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Labelled bonds

We continued to look behind ‘green’, ‘social’ and ‘sustainability-linked’ bond labels, deciding to purchase only if the true sustainability value of an investment meets our expectations.
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We supported sustainable property development and refurbishment through projects such as the Earnshaw building, which has achieved high environmental and wellbeing standards.
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Inclusive future

We furthered our work with banks, social housing and the energy sector on the unintended social impacts of climate transition plans, helping shape a ‘just transition’ to a low-carbon economy.
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Water utilities

We grew our engagement programme with all 11 UK water utility companies on key challenges including climate change, biodiversity and balancing infrastructure investment with affordability.
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Stewardship activities

We have used issues important to our clients and wider society to showcase some of our engagement, research and voting activity. We have also highlighted initiatives we have participated in and led throughout 2023.

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Engagement themes

The physical impacts of extreme weather – and the policies and infrastructure changes we’ll need to reduce emissions – are disrupting financial markets and ‘business as usual’. We focus our stewardship efforts on encouraging business transformation that supports the goals of the Paris Agreement and a net zero emissions future, while building resilience to the physical risks of climate change.

Climate engagements: 278*

  • Net Zero Stewardship Programme: Evaluating and monitoring transition plans and reporting our progress
  • EDF: Acute physical risks require climate adaptation
  • Shell: New CEO raises questions about long-term climate strategy

* Number of engagements is often higher than number of companies engaged as multiple ESG issues could be discussed with one company in the same meeting.          

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Companies succeed when everyone has an opportunity to participate and be productive members of society. We are helping to shape a just transition, asking companies to promote economic equality and protect the vulnerable as they work towards a sustainable future.

Social and financial inclusion engagements: 113

  • Published a just transition paper on social housing with Friends Provident Foundation
  • Worked with our client Border to Coast to engage with large UK banks and CLP Holdings
  • Supported shareholder proposals at Chevron, Amazon and ExxonMobil

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We expect companies to enable and support healthy employees, customers and communities. We encourage greater transparency and positive social outcomes.

Health engagements:142

  • Supporting CCLA’s workplace mental health benchmark
  • Engagement with Rentokil on improving employee mental health
  • Lead investor engaging with Roche, supporting affordable access to medicines

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Artificial intelligence, data privacy, censorship and the ever-increasing growth of technology are issues we expect companies to scrutinise and plan for. In a rapidly evolving digital world, we support several initiatives to strengthen cyber resilience and the ethical application of technology in the companies we invest in.

Innovation, technology and society engagements: 19

  • Published an update on our cyber security collaborative engagement
  • AbbVie adopts our best practice guidance in updated disclosures
  • Voted for shareholder proposals asking for more transparency at big tech companies

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Good governance, a healthy workplace culture and a diverse workforce create resilient businesses and support inclusive decision making. We expect companies to have strong boards, appropriate pay structures, and robust audit and accounting procedures.

Governance and corporate culture engagements: 197

  • Engaging with Glencore on remuneration and health and safety
  • Progress on gender diversity at Bandai Namco in Japan
  • Ferrexpo makes progress on ethnic diversity targets

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We aim to understand the impact of our investment decisions on biodiversity and the associated dependencies, risks and opportunities. We have started to engage with companies to improve their stewardship of nature, encouraging them to enhance their knowledge, management and disclosures to protect our environment.

Biodiversity engagements: 32

  • Outreach to UK house builders on meeting biodiversity net gain requirements
  • Grosvenor has ring-fenced funding for biodiversity net gain management in projects for which it has full control
  • Joined Nature Action 100, a collaborative engagement initiative addressing biodiversity loss globally

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Investment actions

Responsible investing is a cornerstone of our business, rooted in our belief that well-managed companies can yield better long-term returns. We believe integrating environmental, social and governance (ESG) and climate factors into our investment analysis and decisions helps us mitigate material investment risks which can help boost long-term returns.

Our investment principles

Our principles are a reflection of our fundamental approach to investing actively for the benefit of our clients.

  1. Differentiated active approach: open-minded, independent and long term
  2. Distinct culture: empowered teams, expert central functions
  3. Trusted stewards: passionate about responsible investment
  4. Purpose-driven: doing the right thing, building for a better future

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Asset classes

Responsible investment and stewardship can mean different things to different investors. We know there are a number of alternative pathways to meet sustainability and net zero goals, and that our clients will want to use different approaches depending on their values, goals and investment objectives. That is why we offer a variety of choices to clients who want to invest responsibly.

Select the asset classes below to read more about our 2023 investment actions in this year’s report.