Increasing numbers of asset managers are providing their clients with a pass-through voting capability, meaning that the client can take greater control over how proxy resolutions are voted at company shareholder meetings.
Pass through voting can take the form of custom voting policies, direct over-ride on certain topics or votes, or entirely voting pass-through for certain companies. Pass through voting can be a way of helping asset owners to achieve alignment with their own stance on, in particular, environmental and social issues thereby increasing asset owner voice on these topics. However, there are concerns that by separating voting from ownership and engagement it could instead act to weaken stewardship. Others contend that it is simply a way for asset managers to take political cover in contentious areas of voting.
Given the emerging, but potentially significant and growing, influence of pass-through voting, the UK’s newly established Investor and Issuer Forum (IIF) has decided to make it one of their priority strategic projects for 2025. LSE is working with the IFF to design a research project comprising literature review, development of a conceptual framework for analysing pass-through voting, and stakeholder interviews amongst members and providers in order to provide insight on the potential implications of this practice.
This project is funded by the Responsible Investing Initiative.
For further information contact Professor Suren Gomtsyan s.gomtsyan@lse.ac.uk
