Proxy voting and class actions - today’s ESG challenge: key findings

Environmental, social and governance (ESG) pressures are reshaping shareholder engagement across proxy voting and class actions. As participation rises across the investor spectrum, firms are being forced to reassess whether existing operations can support higher volumes, greater scrutiny and growing operational risk. 

How much pressure are proxy voting and class action volumes placing on firms today? Where are new costs and risks emerging, and how are issuers, intermediaries and investors adapting their operating models to keep pace?

The findings draw on input from market participants around the world and provide a cross-market view of how shareholder engagement is evolving across issuers, intermediaries and investor clients.

The research, produced in partnership with FIS, Goal, International Securities Services Association (ISSA) and Proxymity, highlights:

• 63% of investors would incorporate shareholder engagement into investment management decisions, rising to 86% in Europe

• US dollar (USD) 12,980 average cost per proxy vote: proxy voting remains operationally expensive, with issuers, intermediaries and investors each absorbing a share of the total cost

• 64% of investors report significant problems in shareholder engagement, with votes getting lost between investor and issuer the leading concern

• Operational risk varies across the chain: the pressure points differ by participant type, showing that weaknesses are spread across the end-to-end process

• Transformation is becoming more urgent: firms are rethinking proxy voting and class action processing as shareholder engagement moves closer to the centre of governance strategy