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Half of world’s largest managers ‘looking at client-led voting’, finds UK government backed taskforce

One manager is considering setting up an annual forum to consult clients on voting ahead of proxy season.

Half of the world’s largest asset managers are considering implementing client-led voting in pooled funds and a quarter are actively investigating the possibility, a report by the Occupational Pensions Stewardship Council has found.

The council, a coalition of UK asset owners with more than £500 billion ($613 billion; €582 billion) in assets, wrote to 44 of the world’s largest managers – including BlackRock, State Street and Vanguard – in December last year, asking for details of their policies on client voting and vote reporting.

Seven of the managers did not respond to the letter, but nine said they were actively looking into client-led voting, 11 said they were “considering” it and two said they allowed it in both pooled and segregated mandates. The council’s report does not name managers but both DWS and BlackRock have announced plans to allow client-led voting in pooled funds.

A number of managers said that they would let client demand and industry developments guide their response, with some mentioning that market practice and technology were not sufficiently developed for them to be confident they could offer the service.

The report also examined attitudes towards consulting asset owners on voting policies. Every respondent said they disclosed information on voting policy and records, and half allowed clients to share voting policies. A third of managers said that they were “not open to forward-looking discussions with clients on voting”, but one manager is considering establishing an annual forum for its clients to discuss voting policy ahead of each proxy season.

The council concludes that there is movement in the voting space, and encourages managers to engage with clients on voting: “There is no ‘one size fits all’, but it is clear that asset owners want more of a say when it comes to voting and at a minimum this should start with better and more proactive communication.”

Momentum towards offering asset owners the chance to vote their shares in both pooled and segregated funds has been growing in the UK over the past six months. A report by the government-established Taskforce on Pension Scheme Voting Implementation slammed asset manager attitudes on the topic, warning that the “nuclear option” of legislation could be needed if managers refused to offer asset owners a say.

When RI questioned a number of the world’s largest managers on their policies in November, LGIM said that split voting was the “undoubted direction of travel”, but State Street, Vanguard and Abrdn said they had no active plans to implement it.