Josephine Notaras, Manager, Sustainable Financial System team, PRI


With the proxy season nearing its end, proxy advisers have once again been under the spotlight for their role in the shareholder voting process. Over the years, proxy advisers have been challenged about their perceived influence over their investor clients’ voting decisions, high-level voting recommendations that lack nuance e.g. in smaller, local markets, and a lack of adviser choice.  

New PRI research shows that institutional investors and proxy advisers are aware of these criticisms, and they are open to supporting improvements in the voting chain. A key finding from our research, which backs up the 2023 Financial Reporting Council data, is that although investors are aided by proxy advisers, they are not simply following recommendations. Many investors use customised voting policies, developed with their proxy advisers, along with other data sources to inform their voting decisions.[1]

Although investors are aided by proxy advisers, they are not simply following recommendations. Many investors use customised voting policies, developed with their proxy advisers, along with other data sources to inform their voting decisions.

Our findings 

Investors we spoke to use proxy advisers in diverse ways in their voting decision-making. This includes using research and voting recommendations from one or more proxy advisers of various sizes and locations, alongside additional data and research sources. Investors may also use different proxy adviser voting packages, such as a more generalised benchmark service (which covers different regions and considers local practices, regulations and codes e.g., stewardship or corporate governance codes), specialty / thematic policies (e.g., focused on climate change) or custom voting policies (tailored to the investor), or a combination of the three. Investors may also use proxy adviser voting execution services. 

Understanding how investors use these services is important when looking at the alignment between proxy adviser ESG recommendations and investor voting behaviour. Our quantitative research looked at whether there was a correlation between certain proxy adviser benchmark policy recommendations and investor votes on ESG proposals. Our data showed that there is a correlation, particularly for some of the more standard governance or ‘G’ votes. However, when overlaid with our qualitative analysis and a more detailed understanding of how investors use proxy advisory services, it is apparent that any correlation is more complex than investors solely following their proxy adviser’s recommendations.  

The investors who participated in our research explained that the way they vote depends on the nature of the issue being voted on and their internal governance structures, e.g., decisions can be made by stewardship teams, investment teams or a combination of the two – with some decisions escalated to oversight committees. However, investors were clear they make their own decisions in line with their fiduciary duty, based on their internal voting policies and a range of data sources – proxy advisers being one of them.   

Challenges across the voting chain  

In terms of helping investors manage the AGM voting process, there is little doubt about the value that proxy advisers bring to the market: investors would struggle to cover the breadth and depth of issues in-house without proxy adviser support. However, using these services does not come without challenges. These include sometimes narrow recommendations from proxy advisers, internal stewardship resourcing constraints, and structural issues in the voting chain. For example, the time between AGM papers being sent to shareholders and investors submitting votes is extremely tight.  

Some other challenges include:   

  • A lack of local knowledge. Proxy advisers could bring greater value by including more geographical and sector-specific information in their research and recommendations.   
  • A need for greater consideration of systemic risks, such as climate change, biodiversity loss or rising inequality.
  • Some errors and inconsistencies in the advice received by investors, though investors flagged their proxy advisers had generally been receptive to making changes.  
  • A need for improved communication between proxy advisers and investors. Proxy adviser research is client and data-driven, so market feedback and high-quality data is essential. Not all the investors we spoke to participate in their proxy adviser policy development processes due to a lack of internal resources.  
  • Limited transparency of proxy advisory services and the different actors involved in the voting chain. For example, some of the investors we spoke to had limited knowledge of the Best Practice Principles Group (BPPG), the self-regulatory body for the shareholder voting research industry and were unaware that some proxy advisers adhere to local stewardship codes.  
  • Issues with the voting chain structure – for example, challenges in vote processing and a lack of integration between different systems. 

How investors can play their part  

Addressing these challenges requires action across the voting chain, not just from proxy advisers. As we look ahead to next year’s proxy season, we recommend investors to consider taking the following actions: 

  • Starting at the top of the chain, asset owners should ensure external investment managers are aligned with their voting policy, for example by evaluating their manager’s voting record on specific topics. Our most recent reporting data shows that most investors ensure that their potential manager’s proxy voting policy / guidelines are aligned with their own, but only a minority of investors evaluate specific actions taken, such as reviewing voting records. Asset owners may find it helpful to use our evaluation tool and due diligence questionnaire to evaluate and compare managers’ stewardship practices. 
  • Asset owners and investment managers should also ensure they carry out robust due diligence when appointing a proxy adviser and that they dedicate sufficient time to monitoring and engaging with the services they choose, in line with their voting policies. 
  • For all of the above, it is key that investors align their resources with their stewardship ambitions, consistent with their fiduciary duty, beneficiary interests and client mandates. A recent PRI-commissioned report from the Thinking Ahead Institute examines the current level of stewardship resources within the industry and promotes using a structured approach to measure those resources, including the Stewardship Resources Assessment Framework.  

Further resources 

  • This 2023 Financial Reporting Council research analyses the influence of proxy advisers on investors’ voting decisions and outcomes in a FTSE 350 context.  
  • This European Securities and Markets Authority report reviews the implementation of the EU’s Shareholders Rights Directive (SRD2) provisions on proxy advisers and the investment chain and suggests some areas for improvement.  
  • This 2024 European Corporate Governance Institute working paper examines the role of customised voting advice in shaping shareholders’ voting decisions.  

What happens next? 

As mentioned, investors and proxy advisers are aware of structural challenges in the voting chain and are open to supporting improvements. Now is the time to act: we suggest stakeholders across the voting chain take up our recommendations to bring about positive change to the shareholder voting process.  

We will carry out exploratory research on the voting chain in 2024/2025 and would be interested to hear from other stakeholders with knowledge and / or experience of this area. Contact us: [email protected]  

For analysis of this year’s proxy season and emerging trends for next year, please join our proxy season webinar on 31 July or watch the recording online.  


In 2023, we carried out qualitative interviews with 25 stakeholders including asset managers, asset owners, proxy advisers, academics, NGOs and regulators, across a range of geographies. We also carried out quantitative research based on a sample of 538 PRI signatories covering 99,165 environmental / social votes and 1.2 million governance votes between 2011-2022 covering companies in 23 countries and investors in 31 countries. We used proprietary data and data from Proxy Insightia for our research.