Industry Updates

State Street joins BlackRock and Vanguard in devolving proxy voting powers

Institutional clients in the US and UK will now be able to vote their shares

Theo Andrew

State Street office building

State Street Global Advisors (SSGA) is the last of the ‘Big Three’ to devolve corporate proxy voting powers to investors following similar moves by BlackRock and Vanguard.

Under the new programme, investors in “certain institutional funds” in the UK and US – covering more than 40% of SSGA’s equity index assets – will be offered a range of voting policies from the start of the proxy 2023 voting season, SSGA said in a statement.

It comes just over a month after Vanguard announced it was piloting a scheme for US retail investors and a year after BlackRock gave institutional clients the power to vote their shares, following mounting scrutiny about the power passive giants have over corporate America.

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SSGA said it intends to expand this to as much of its index equity assets as possible.

“Giving even more investors the chance to choose how to vote shares held in funds they are invested in will remain a priority,” Lori Heinel, executive vice president and global CIO at SSGA, said.

“Whether our investors delegate voting responsibility to us or choose a different voting option, we remain committed to that mission.”

Like clients in SSGA’s separate managed accounts, investors will vote via the asset manager’s proxy voting provider, the Institutional Shareholder Service (ISS), but can still choose to delegate their votes to the SSGA asset stewardship team.

According to SSGA, there are currently eight voting guideline options that have been made available via the ISS, covering policies comprising benchmark, sustainability, socially responsible investment, Catholic principles, public fund, Taft-Hartley policy and board-aligned policy.

SSGA, BlackRock and Vanguard – often labelled the ‘Big Three’ – have been eager to change the view they hoard power via their trillions of dollars of passive assets which could become an increasing focus for regulators.

It could also be seen as a move to placate activists and politicians, with the likes of Elon Musk, Bernie Saunders and Berkshire Hathaway’s Charlie Munger all speaking out against the rise of passives within the past 12 months.

Last month, BlackRock founder, chairman and CEO Larry Fink wrote a letter to clients about the “transformative power” of investor-led voting, noting “tremendous interest” from clients.

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