Stewardship code awareness low in APAC: survey

The broader implementation of stewardship codes is hampered by an unclear link between engagement and value creation and the high costs involved in engaging with companies, according to a CFA Institute report.

The level of awareness of stewardship codes among financial institutions in Asia-Pacific remains low and needs to be increased, according to a survey conducted by the CFA Institute.

According to the survey, 42% of the respondents rated themselves as having little or no understanding (1 or 2 on a 5-point scale) of stewardship codes in the markets in which they invest, while only 28% said they understood them well or very well (4 or 5 on a 5-point scale).

Around 47% of investors said they considered stewardship principles when making investment decisions.

According to the report, the survey responses indicate that many respondents do not fully appreciate the potential of stewardship and engagement with companies to create value. This highlights the need for a better understanding of the benefits of stewardship and the role of stewardship codes play in promoting sound investment governance practices and in the advancement of ESG principles.

“Investment professionals need to expand engagement with their investee companies beyond the annual general meetings,” Mary Leung, head of advocacy for Asia-Pacific at the CFA Institute, said.

“What is needed is an ongoing, transparent process of engagement with issuers to improve operating and financial performance, devote a higher level of attention to material ESG factors, to bolster confidence in markets and provide a clear linkage between implementation of stewardship principles with positive outcomes that can accelerate value creations,” she added.

The survey included 334 respondents from nine APAC markets, including Hong Kong, Australia, Singapore, Japan, Malaysia, South Korea, Taiwan and Thailand. They include institutional investors, asset managers, service providers, corporates and others, according to the report.


The report noted that there are two obstacles to the broader implementation of stewardship codes: an unclear link between engagement and value creation – cited by 38% of respondents, and the high costs involved in engaging with companies, cited by 36% of those surveyed.

To improve effectiveness, 62% of investors indicated a preference to have a regulatory body as a supporter and overseer of stewardship codes, while 49% believed that the “comply-or-explain” model provided a sufficient level of oversight and enforcement.

In the repot, the CFA Institute recommends:

  • Adoption of principles-based stewardship codes, enforced on a comply-or-explain basis, with effective monitoring of compliance.
  • Prominent inclusion of sustainability and ESG in stewardship codes.
  • Promotion of stewardship codes by local regulators and industry bodies; creating opportunities for institutional investors to learn about the codes and their implementation in practice.
  • Establishing global best practices, while allowing for flexibility to cater to different markets and business models.
  • Exercise of “leadership from the top” by asset owners in promotion of stewardship codes, and encouraging stewardship practices among other players in the industry.