Can Proxy Voting Changes Boost Impact in Listed Equity?

Two of the world’s biggest asset managers are adjusting their proxy voting approaches to give their investors more of a chance to have an impact through shareholder votes.

BlackRock announced last week that it had partnered with Proxymity, a digital investor communications platform, to allow some of its pooled fund investors in the UK to register their preferences on shareholder votes at company AGMs.

In a letter to clients and corporates, BlackRock chairman and CEO Larry Fink said the company’s Voting Choice program “has the power to transform the relationship between asset owners and companies”. He added that, “if widely adopted, it can enhance corporate governance by injecting new voices into shareholder democracy”.

He expressed hope that, through technological advances and regulatory shifts, investors of all kinds would be able to vote their shares even if held through pooled investment vehicles.

Meanwhile, Vanguard last week announced it planned to test “a number of proxy voting options for individual investors” from early next year.

The company said it wanted to “assess ways to provide individual investors the opportunity to participate more directly in the proxy voting process”. However, it did not give details of what the options would be.

The announcements came as the Securities and Exchange Commission (SEC) published changes to its proxy voting rules designed “to enhance the information mutual funds, exchange-traded funds, and certain other registered funds report about their proxy votes”.

“The amendments will make these funds’ proxy voting records more usable and easier to analyze, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records,” the SEC said in a statement.

Commissioner Caroline Crenshaw explained that the rule changes meant that voting records would be broken down into standardized categories using a “structured data language”, making it easier to analyze efficiently and “ultimately be more readable by the end user”. In addition, the rules mean proxy voting records will be available on fund websites.