LONDON (June 26, 2023) – Institutional Shareholder Services (“ISS”), a leading provider of end-to-end corporate governance and responsible investment solutions to the global financial community, released the following statement in response to research on the impact of proxy advisers recently published by the UK Financial Reporting Council (FRC).
The FRC report’s key findings, supported by data, surveys, and industry interviews, reinforce longstanding facts about the role that proxy advisory firms play in the financial ecosystem and the way in which investors use their services.
“We are pleased that the report’s empirical analysis confirms what we have known all along; namely, that investors, not proxy advisers, drive investors’ proxy voting decisions,” said Lorraine Kelly, Global Head of Investment Stewardship Solutions at ISS. “Importantly, the report makes clear that investors increasingly base their decisions on their own in-house ‘custom’ voting policies, while proxy advisors’ range of proprietary voting policies provide choice to cater to investors’ diverse and varied investment approaches.
“As the report concludes, institutional investors use proxy advisory firms’ research, analysis, and recommendations as just ‘one piece of the jigsaw,’ and it is to be expected that if an investor has selected a voting policy that closely reflects their views that their voting decisions would be in line with that policy in most instances,” added Kelly.