Navigating a New Age of Ambiguity

Although much has been said about growing political divisions in many parts of the world, it seems like everyone agrees that investor stewardship matters.

The conversations and decisions taken on strategy, corporate governance, and sustainability matters of strategic importance – by both institutional investors and company boards – are of keen interest to a wider group of stakeholders than ever.

And yet, despite that keen interest, we seem to be entering an age of ambiguity.

Much has already been said about the flurry of executive orders and regulatory updates emanating from Washington D.C. so far in 2025, the political impact of which is best left to others to comment on. 

However, it’s been clear from the changes to stewardship policy I’ve observed, and from changes in the content of conversations that I’m having with asset managers and asset owners, that something has shifted. It appears that institutional investors’ who were once willing to specify exactly what kinds of actions they want boards to take on governance and sustainability, and how they might respond to inaction in these areas, are now less inclined to do so. And although few will say so, it’s reasonable to conclude that the increased political risk of doing so is part of the overall calculus.

The vibe shift has shown up in a number of ways. 

• Institutional investors’ willingness to support environmental and social shareholder proposals has fallen to a historic low, even on topics that achieved significant support in prior years. (It’s notable that the only E&S topic that gained majority support at the corporate ballot box in the US so far this year is political spending disclosure.)

• Following changes to the US disclosure requirements when investor engagement conversations broach the topic of voting intentions regarding board composition and structure (i.e. Schedule 13D/G disclosures), institutional investors have become less inclined to start such discussion with boards, and caveat the conversation when they do.

• Institutional investors have long prioritised “whole of board competence” in areas of strategic importance, often providing extensive detail on their expectations on board tenure, composition and areas of specialism. However, amid the current political hostility on sustainability and diversity in particular, investors’ policies have become more ambiguous.

All this means there’s a lot more for company boards to figure out for themselves regarding which investment institutions they should prioritise for engagement, and which topics need to be discussed in detail. 

It also means it’s a lot more important for companies to keep across their largest investors’ stewardship policies and voting records at shareholder meetings in order to be alert to potential issues that will need to be worked out with shareholders.

An age of ambiguity doesn’t have to become an age of unpleasant surprises. 

About the author

Lindsey Stewart is the Director of Stewardship Research and Policy at Morningstar Sustainalytics. He has over 20 years' experience advising listed companies and other international organisations on investor engagement and corporate reporting at Makinson Cowell, KPMG and the Financial Reporting Council. Lindsey works closely with Morningstar Sustainalytics’ engagement services and ESG proxy voting specialists worldwide to deliver insights on how institutional investors, companies, and regulators are approaching key sustainability and governance themes in global finance. Lindsey is a Chartered Global Management Accountant and a CFA® Charterholder.