ShareAction report on asset managers’ proxy votes

ShareAction has just published their 2021 report on shareholder voting.

The gist of the report is that many shareholders, most importantly amongst them the largest (because they have the most votes) are not supporting shareholder resolutions on environmental and social issues – even when their proxy advisers are recommending they should.

There will doubtless be situations where investors will have given environmental and social issues serious consideration and decided that a vote against management would be unhelpful or inappropriate – but it seems unlikely that this will consistently be the case.

ISS and Glass Lewis are far from being campaign organisations (their remit is very different from ShareAction) – and they do not have reputations for setting the ESG bar particularly high – so this should be taken seriously.

Stewardship activity (and therefore ‘change’) often pivots on shareholder votes so it is incumbent on those with with the ability to vote in favour of progress to do so when the opportunity arise.

My recommendation – in line with the spirit of stewardship – is that intermediaries and end investors engage with asset owners.  Ask about their voting policies or event specific votes (as shown in the report or elsewhere). And if you are not comfortable with their response make your views known – and ask if or how they plan to vote differently in future.

The ShareAction 2021 report can be downloaded here.

For further information on what constitutes best practice take a look at the FRC’s (Financial Reporting Council) revised Stewardship Code.  Their website explains the Code and lists those who adhere to their recently raised standards.

If you’d like to see more about the role of stewardship and how it interacts with stock selection see our recent Stick or Twist article.

https://shareaction.org/reports/voting-matters-2021-are-asset-managers-using-their-proxy-votes-for-action-on-environmental-and-social-issues

https://www.frc.org.uk/investors/uk-stewardship-code/uk-stewardship-code-signatories