Room for Greater Openness from Proxy Advisory Firms

The five largest global proxy voting advisory firms have overall improved their transparency when disclosing how they operate, according to analysis by the Independent Oversight Committee (IOC). The 12-person international group, which represents investors, companies and researchers, assessed the firms on their second-year reporting of compliance against industry Best Practice Principles adopted in 2019. While noting overall improvement, the IOC identified gaps in how some providers communicate conflicts of interest risk, policies around issuer feedback on proxy reports, and compliant channels. The five firms – EOS at Federated Hermes, Glass Lewis, Institutional Shareholder Services (ISS), Minerva, and PIRC – should look to continue improving service quality, integrity, and communications practice and disclosure, the IOC said. Dr. Stephen Davis, IOC Chair, said: “Proxy voting advisors and research providers are a vital information resource for shareholders who decide the fate of director elections and corporate strategies worldwide. There is no room for black boxes in this space, so the IOC welcomes the advances in openness achieved over the past year. Investors, companies, and regulators will want this trend to accelerate to further the cause of more responsive capital markets.” 

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