All About the Outcomes

Measuring the impacts of stewardship is far from simple, even as technological innovation begins to smooth the way. 

When it comes to driving sustainability-related performance at portfolio companies, stewardship is one of the most effective tools currently at investors’ disposal. 

As evidenced during ESG Investor’s Stewardship Summit last month, asset owners are increasingly focused on the outcomes of high-quality engagement – as opposed to the number of engagements undertaken each year. 

“Asset owners are increasingly attuned to the fact that financially material risks linked to system-level issues – such as climate change, biodiversity collapse or social instability – are largely undiversifiable,” Clara Melot, Stewardship Specialist at the UN-convened Principles for Responsible Investment (PRI), tells ESG Investor. “As fiduciaries, they may have a legal obligation to consider what they can do to mitigate risks and act accordingly – this is where outcomes-focused stewardship comes into play.” 

If an investor has engaged with a carbon-intensive company on its climate-related ambition, a positive outcome may be that it sets decarbonisation targets to include Scope 3 emissions, or that it develops and publishes a transition plan aligned with the UK-based Transition Plan Taskforce’s guidance.  

In contrast, a negative outcome may be that the company refuses to raise its ambition, or ditches climate solutions funding altogether.  

The importance of measuring and disclosing such outcomes is also coming into sharper focus thanks to an increase in frameworks, codes and regulations requiring investors to provide robust disclosures on their stewardship activities with portfolio companies.  

However, despite emerging technology-driven tools designed to streamline the engagement process, measuring the effectiveness of stewardship outcomes remains challenging for asset owners and asset managers for a plethora of reasons – such as a lack of standardised metrics, accurate attribution, limited visibility, to name but a few. 

“Asset owners have always been keen to take an outcomes- and materiality-focused approach to stewardship as part of their fiduciary duties,” notes Caroline Escott, Senior Investment Manager for Active Ownership at UK pension fund Railpen. “This approach is fundamental to help asset owners make the most of a finite level of stewardship resource and ensure they push managers on the critical issues that matter most to

Innova Capital closes latest fund at €407m 

European private equity firm Innova Capital has closed its latest fund, Innova/7, raising €407m, surpassing its €350m target and $400m hard cap. 

Innova/7 focuses on business and financial services, industrials and consumer & lifestyle, attracting institiutional and commercial support from Polish investors, whose total share in now over 25%, as well as elsewhere in Europe and North America.

The fund’s first investment was a 2023 acquisition of Romanian payment services provider NETOPIA Group. Innova/7 has since invested in multi-brand football merchandise distributor R-GOL; gate and handling systems provider EMI Group; wood-based boards manufacturer Pfleiderer Polska; BHS automation solutions provider Dimark Manufacture; and CloudFerro, a provider of cloud services to the European space sector.

Peloton shares surge as news of PE buyout interest breaks

Shares in Peloton soared by as much as 18% on Tuesday after CNBC reported that several private equity firms are considering a buyout of the connected fitness company, which is looking to refinance its debt and return to growth after 13 consecutive quarters of losses.

CNBC’s report cited an unnamed source in confirming that the New York-based company has held talks with at least one firm as it considers going private, with a number of other private equity firms also reportedly viewing Peloton as a potential acquisition target, although it is unclear whether any other formal discussion have taken place.

Peloton has become a takeover target after seeing its market capitalisation plunge to about $1.3bn as of Monday, from a high of $49.3bn in January 2021.

Last week, Peloton’s CEO Barry McCarthy quit and the company announced around 400 job cuts as part of a plan to reduce costs after posting weak results in its latest earnings report.

According to CNBC’s source, there is no certainty a deal will happen and the business could remain a public company.

Royal Society and academics clash over influence of oil and gas industry

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A clash between Britain’s 363-year-old Royal Society and more than 2,000 UK academics has escalated over the national academy of scientists’ refusal to attribute the role of oil and gas companies in climate change.

The academics had expressed their concerns about the influence of fossil fuel companies on scientific research in a letter last year to the Royal Society, founded in 1660 as a fellowship that included the likes of Isaac Newton.

But the Royal Society has now rebuffed their request to issue an “unambiguous statement about the culpability of the fossil fuel industry in driving the climate crisis”.

Treasurer Jonathan Keating wrote in reply last week that it would “not be appropriate” to do so, as there was a need for “multiple actors” to engage with the complexity of the climate crisis.

The academics’ concerns about the influence of oil and gas companies extend to separate allegations that ties to BP were not disclosed by a Cambridge professor in a Royal Society policy briefing document produced by a working group that he chaired in 2022.

Professor Andy Woods held the title of head of the BP Institute, a research arm that it funds, which was renamed the Institute for Energy and Environmental Flows by Cambridge last year. He also has the formal title of BP professor, a position endowed by the oil and gas company. These affiliations were not included in the reference in the document.

The Royal Society briefing document called for an “enormous and continued investment” into geological carbon capture and storage, a technology promoted by the fossil fuel industry as a way to keep expanding while storing the emissions.

A CO₂ storage adviser to BP and a director for CO₂ storage at the Norwegian Petroleum Directorate also contributed to the report.

Woods’s expertise in geophysical fluid flows and the BP affiliation are listed elsewhere by the Royal Society in its fellowship directory.

BP and Woods did not respond to a request for comment. The Royal Society said the document gave “clear affiliations” for contributors and that it publishes a wide range of research.

The tensions reflect the discord in academia about funding or participation in research by oil and gas companies, as well as rising activism on campuses among the student body and staff.

The Royal Society’s decision not to call out the industry was

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