Global Shareholder Stewardship: Complexities, Challenges, and Possibilities

Within less than twenty years the idea of shareholder stewardship has become a global phenomenon. In 2010, the United Kingdom hastily released the world’s first stewardship code to cure what was perceived to be the UK’s primary corporate governance malady: rationally passive institutional investors in a country characterised by a dispersed ownership structure. Today, UK-style stewardship codes exist in 20 jurisdictions, on 6 continents, and are embedded in a panoply of legal systems, shareholder markets, and corporate cultures. This introductory Chapter to the Global Shareholder Stewardship edited book explains why shareholder stewardship around the world is far more complex than the existing literature suggests and how this complexity impacts current theories and existing practices. To explain complexity, the Chapter provides a loose taxonomy of global shareholder stewardship by categorizing stewardship along three dimensions. The first-dimension illuminates how stewardship can be conceived in a variety of ways – which makes the intellectual exercise of understanding stewardship complex and presents a challenge for policymakers to implement an idea with multiple conceptions. The second-dimension compares the formal design and content of stewardship codes globally and reveals that they have largely been modelled after the first version of the UK Code (2010/2012) – creating a mirage of global uniformity based on the UK Model of stewardship. The third-dimension demonstrates how the different origins of the codes (government codes versus institutional investor codes), a variety of mechanisms for enforcing (or not enforcing) codes, and jurisdiction-specific corporate governance factors that impact how the codes function, result in stewardship serving a variety of functions which would have never been anticipated by the original drafters of the UK Code. This complexity, which has largely been overlooked in the literature, creates distinct varieties of stewardship. Based on the distinct varieties of stewardship in jurisdictions around the world, this Chapter concludes by illuminating the challenges and possibilities of global shareholder stewardship. The taxonomy also serves as a useful lens for observing the common themes and points of intersection that make the whole of this Book greater than the sum of its individual Chapters.