Bridge over ocean
6 August 2020 Position Paper

Stewardship 2.0

Awareness, Effectiveness, and Progression of Stewardship Codes in Asia Pacific

  1. Mary Leung, CFA

CFA Institute reports on the awareness, effectiveness, and progression of Stewardship Codes in Australia, Hong Kong (SAR), India, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand including origins, definitions, enforcement, and compliance.

This report looks to provide unique insights from the perspective of institutional investors to show how they have applied stewardship codes in their professional capacity. Given that regulators and industry bodies in Asia Pacific are reviewing existing codes or contemplating the implementation of new ones, we believe these results will be useful in guiding the development of future codes. This report aims to provide recommendations to increase the awareness and effectiveness of stewardship codes specifically within the Asia Pacific markets.
Stewardship 2.0 View full report (PDF)


CFA Institute encourages an outcomes-focused establishment or update of stewardship codes. A continuing critical eye should be placed on any stewardship code to ensure that compliance with codes truly raises the bar of engagement rather than ticking the box. Upon review of our findings, we have compiled the following recommendations when considering the creation, revision, and application of stewardship codes:

  • Aspirational standard: Stewardship codes should remain a comply-or-explain standard and should be sufficiently monitored to ensure that signatories follow through on stated policies and represent a high professional standard. A comply-or-explain standard also allows flexibility.
  • Promotion and awareness: Local regulators or industry bodies should ensure that institutional investors have ample opportunities to learn in detail how best to act responsibly as shareholders and apply stewardship principles in a practical manner.
  • Flexibility: This means accommodating investors with different business models, investment strategies, and levels of resources.
  • Need for global best practices, with flexibility to cater for market differences: Notwithstanding a high degree of overlap in stewardship principles, significant differences exist in objectives, market structures, and corporate governance frameworks across markets. Oversight bodies may wish to address the most pressing issues in their own markets when designing their codes.
  • Leading from the top: Stewardship codes should be promoted from the highest levels of the investment chain to align incentives of all parties. In this regard, asset owners have a unique role to play in encouraging a higher level of stewardship.
  • Inclusion of ESG: Recently updated stewardship codes have incorporated the consideration of ESG factors as a specific principle. We welcome this development. CFA institute believes that material ESG factors are key drivers of long-term value and that investors should integrate such factors in the investment process so that they and their beneficiaries benefit from a complete analysis.

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