A New Stewardship Framework

This chapter offer a vision for the future. Rather than try to revive the traditional shareholder primacyshareholder primacy orthodoxy or double down on ESGESG, scholars and policymakers should confront the reality that large asset managers have come to function as political actors that wield substantial influence over the economy and society as a whole. With the centralization of the voting decision-making process among the world’s largest asset managers, it is incontrovertible that shareholder voting is no longer a straightforward investment exercise based on a bottom-up analysis of a limited universe of companies. A separation of ownership from ownership has emerged, but perhaps more importantly, that separation has birthed a new conception of voting and control that is disconnected from traditional notions of investing. The exercise of shareholder voice has in all practical respects assumed the form of a regulatory power, carried out on the basis of a generalized view of what is “good” for corporate America as a whole, and then applied to America’s public companies across the board. Efforts to reform the status quo—whether they are effectuated through formal regulatory measures or the actions of market actors—must begin with an acceptance of this basic fact.