As fiduciaries, we are committed to effective stewardship of the assets we manage on behalf of our clients. Jessica Mann, Head of Stewardship with Wells Fargo Asset Management describes WFAM’s vision, history, and active approach.
Jessica Mann: To solve the biggest problems in the world, we all have to work together as partners. And stewardship will deliver on that.
Laurie King: That’s Jessica Mann. I’m Laurie King, and you are listening to On the Trading Desk®.
This conversation highlights key aspects of an investment perspective, a paper, called Stewardship: A catalyst for maximizing long-term value. We’re talking with its author, Jessica Mann, Head of Stewardship at Wells Fargo Asset Management. Welcome to the program, Jessica.
Jessica: Thank you Laurie. It’s a pleasure to be here today talking about a subject that’s near and dear to my heart—stewardship.
Laurie: For those listening, you may contact your relationship manager at WFAM and ask them for Jessica’s full investment perspective—the paper that articulates our vision, history, and active approach to stewardship. But for now, Jessica, let me ask a question. Stewardship is a significant global focus, right?
Jessica: That’s right. In fact, this has become very much a front-and-center topic in the industry, as countries around the world—approximately 50 of them to date—have set stewardship codes.
Not only is it establishing the best practices that are expected of long-term investors, such as asset managers and asset owners like plan sponsors, it’s also establishing corporate governance expectations for companies who are listed in these countries.
So, on issues such as gender diversity of boards, what we’re seeing is that countries are interested in getting their practices or their companies more globally competitive.
Laurie: What’s our point-of-view on stewardship? And how are we delivering on that?
Jessica: Well, as stewards over the assets that we manage, we can be a valuable sounding board to the leaders of the companies we invest in. We can advocate for more transparency and disclosure. We can support positive change and seek accountability from those who have committed to changes.
When we need to, as an active manager, we can also be an influential partner in that we can decide whether to stay invested in a company or to have a consequence of a failure to meet our expectations in that we could potentially decide to exit that investment in a company. So, there are these aspects of accountability that are in place to really make [stewardship] effective.
Laurie: I’d like to crystalize the function of the Stewardship team and its role in the journey information makes—a round trip of sorts.
Laurie: Our investment teams tell your team what their investors are wanting from the companies we invest in. And our investment teams certainly have their views on improving the quality of their investment. You then engage with company leadership, and you deliver that information to them.
Laurie: But you’re also bringing information back to the investment teams to validate that these companies we’re investing in are, indeed, applying that information to run their business better, more sustainably, and for the long term.
Jessica: That’s right.
Laurie: So this idea of stewardship, it’s about both deepening as well as broadening the conversation with company leaders.
Jessica: Yes. We’ve always been deeply committed to active investing, and we have impressive, resident expertise in deep fundamental research. So stewardship is an integral part of that investment process. It enables us to have a voice and exercise our ownership rights to improve disclosures and transparency, and it also allows us to magnify and to amplify our voice in leveraging the overall investment we have as a company to affect corporate activities and behaviors that can really underpin the ability of companies to generate attractive, long-term, risk-adjusted returns for our clients.
Laurie: What’s an example of engagement, as something that we’ve delivered on?
Jessica: Sure. So, a great example would be an oil and gas company that’s based in Texas and the focus on their business resilience to climate change. This company recently did provide its first pass at providing an analysis of their business under the auspices of the Task Force for Climate-Related Financial Disclosures—or TCFD, as we call it. It was a great first exposure to determining what the business would look like moving forward under different climate scenarios. However, they didn’t really expressly set their commitments to the TCFD disclosures themselves on an ongoing basis. So it was a one-off approach, not an ongoing, deepening commitment to TCFD.
What we were able to do in engaging with their CFO and investor relations team—companies in the oil and gas sector are also tending to hire and staff ESG experts—so [we were] bringing that collective team to bear, with us, we were able to speak with them about this expectation that that they would have a deeper commitment to TCFD going forward. And they were a little overwhelmed by the number of different frameworks that are out there and questioning whether this is the right [framework] to be committed to.
So that is an example of a new type of engagement that’s happening at Wells Fargo Asset Management, over and above the types of engagements that our investment teams are having with them in a more traditional way.
Laurie: Before we wrap up Jessica, we welcome a parting thought. What would you like our audience to know about our commitment to stewardship?
Jessica: Stewardship gives us the opportunity to really showcase our active-owner stance with companies, and to really highlight the power of our research and the great capabilities we have as an active firm that is investing globally in the long-term and in the best interest of our clients.
Laurie: Thanks for that, Jessica. Well, I’d like to remind our audience, once again, that you may ask your partner at WFAM for Jessica’s full investment perspective. But for now, Jessica Mann, thank you for joining us.
Jessica: Thank you Laurie.
Laurie: Of course there’s more investment insight on our blog AdvantageVoice® and right here on this podcast. Until next time, I’m Laurie King; take care.