Stewardship

In medieval Europe, stewards (or seneschals) were crucial in handling essential matters related to their lord’s estate. Beyond dealing with legal aspects, the steward’s responsibilities would include auditing the estate accounts, supervising large building projects, and granting permission for large expenditures. In the lord’s absence, the steward would act as a trusted deputy.

Today, building on that central role in the Middle Ages, ‘stewardship’ is generally defined as the conscientious and accountable management of assets or resources entrusted to one’s care. Considering stewardship’s structural role in society and its economic value, it is surprising to see how little the term is used.

In a theological context, many religions consider humans to be stewards of the earth. The Hebrew Bible, for example, explicitly says that ‘the lord God […] took the man and settled him in the garden of Eden, to cultivate and care for it’ (Genesis 2:15).

In a representative democracy, governments have care-taking obligations toward their people. The United Nations emphasizes that ‘the careful and responsible management of the population – stewardship – is the very essence of good government.’

In finance, asset managers act as stewards of client assets. Aside from national stewardship codes, the ‘International Corporate Governance Network’ (ICGN) provides a global framework for investors to fulfill their fiduciary duties in line with best practices. They include monitoring investee companies, engaging them, exercising and protecting voting rights, promoting long-term value creation, and maintaining transparency with clients.

In the corporate world, the separation of management and ownership has given rise to two theories: the traditional ‘agency theory’ and the newer ‘stewardship theory’ introduced in ‘Toward a Stewardship Theory of Management’ (1997).

The agency theory presumes a divergence of interest between owners (principals) and managers (agents) whose self-interested, self-serving, individualistic instincts must be curbed by rigorous governance mechanisms.

The stewardship theory relies on an alternative philosophy about human motivation that recognizes the importance of trust in the manager-owner relationship. It assumes that managers, as stewards, are naturally inclined to behave with a collectivistic, self-actualization, purpose-driven, long-term-orientated mindset. When willing and able to rely on trust, owners can limit bureaucracy to boost productivity.

Stewardship transcends the notion of responsibility. While responsibility can appear to be a burden, stewardship is a privilege. No matter how little trust is left in society’s tank, ‘stewardship’ is a concept worth defending and advancing.