Sustainable finance: Stewardship practices and responsible investment

Transitioning to a sustainable economy is crucial to address urgent global challenges and ensure economic growth aligns with positive environmental and social impacts. Financial companies are critical in leading this transition through investments and stewardship activities. Engagement and voting policies are key for sustainable stewardship; they allow investors to hold companies accountable for their environmental, social and governance performance while influencing corporate decisions that align with sustainable practices. By actively engaging with companies and exercising their voting rights, investors can promote transparency, drive positive change and ensure their investments contribute to responsible business conduct.

Within our ESG Scores and data, underpinned by the S&P Global Corporate Sustainability Assessment (CSA), we assess the policies of financial sector companies regarding their stewardship practices in engagement and voting.

The CSA is an annual evaluation of sustainability practices covering about 14,000 companies worldwide. This review analyzes 930 public companies in the financial sector in 2024.

In 2024, just under 30% of financial companies had a public policy on engagement. This indicates that public policies for adapting stewardship practices are relatively uncommon. Figure 1 shows the different elements companies typically include in their engagement policies. About 28% of companies defined their stewardship objective or the rationale behind their engagement activities; engagement guidelines for biodiversity were the least common, with less than 8% of companies including this. Broader strategy statements are often the first step when establishing a policy, while more advanced policies include greater detail, such as topic-specific engagement guidelines. These results suggest that most companies assessed are still in the early stages of setting a robust public policy.

Only 24% of the assessed financial companies had a public voting policy in 2024. This indicates that public commitment to shareholder voting is still limited and that voting policies are even less common than engagement policies. Figure 2 shows that approximately 18% of the companies had a decision-making process to support shareholder resolutions, making it the most common element in voting policies.

Similarly, voting guidelines on governance factors were found in the policies of 13% of the companies, while only 9% defined criteria for ESG resolutions. The proportion of companies publicly disclosing the percentage of ESG resolutions supported in 2024 was even lower, at 5%. Decision-making processes promote transparency and instill confidence among investors, which explains their frequent inclusion in policies.

Public stewardship policies, such as engagement and voting policies, are still relatively uncommon. The most prevalent aspects of these policies relate to broader objectives and definitions rather than specific topics. Given the increased exposure to financial risks and opportunities associated with sustainability issues, we expect many investors will try to address the drivers of these issues through stewardship activities. Regardless of this, and despite the materiality of the topic to the financial industry, the relatively low share of financial companies with public commitments to engagement and voting suggests that implementation is lagging.