ABSTRACT
Terms like 'responsible investment' and 'engagement' have attracted a great deal of media and industry attention. Integrating and measuring the impact of a responsible investment strategy as part of the investment process is clearly challenging. There is no suggestion that owners should become day-to-day managers. It is not easy for owners, or fund managers, to second-guess professional business managers' views on strategy. Perhaps most importantly, the dialogue between investors and companies should not be a question of applying arbitrary principles or codes. Investors must be close enough to the business in which they are investing to recognise the risk as early as possible and act accordingly. Co-operation between institutional shareholders and the companies they invest in can yield benefits to all parties. An environment that promotes dialogue between the management, the non-executive board and the agents of the company's owners is not just desirable but should be viewed as a necessity of long-term sustainable financial markets.
