Do universal owners behave like universal owners? The emergence of a financial sector norm

Abstract The past few years have seen a surge in scholarship on universal ownership, systematic stewardship, and system‐level investing. These concepts describe the reality that large diversified owners of capital own a more or less representative slice of the market and therefore must concern themselves with systemic risks to the financial system as a whole. To date these treatments have not assessed whether practice follows theory, however. This Article answers the question: Do universal owners behave like universal owners? In this Article, I present the first empirical evidence as to whether investors that adopt a systemic mindset subsequently alter their policies and practices. This Article examines how norms in the financial system arise, take hold, and become self‐fulfilling, and evaluates universal ownership theory as an emerging norm in the financial system by testing it against two existing norm formation frameworks. It assesses the extent to which the largest global asset owner organizations publicly self‐identify as universal owners and analyzes these funds' use of two material devices that align with impact‐oriented approaches to investment and stewardship activities. This analysis finds stark differences between self‐identified universal owners and peer funds without such a self‐designation, suggesting that a universal ownership mindset may translate into the widespread use of high‐impact investor tools that non‐universal owners mainly neglect. The Article also introduces the concept of norm accelerants: mainstream actors and institutions that can play a significant role in shepherding an emerging norm to broad acceptability. The Appendix comprises two proposed experiments to test whether universal ownership theory could become self‐fulfilling, including an Advance Notice of Future Litigation (ANFL) that would allow litigation for future harms to be priced into the market in the present.