Reclaiming the vote. What the rise of pass-through voting means for banks

GlobalData

Mon, February 2, 2026 astatine 9:44 AM CST 4 min read

Stewardship is evolving. Amid shifting regulation, rising shareholder expectations, and intensified statement astir ESG, shareholder voting has go some much strategical and much scrutinised. But shareholder ideology request not simply drift with the tide. It tin beryllium reclaimed.

For years, 1 of the ascendant theories of alteration successful stewardship was simple: prosecute the biggest passive providers, and they would usage their tremendous voting powerfulness to present semipermanent worth for all. This thought is elegant but has go progressively imperfect. These providers are taxable to important regulatory oversight and reporting requirements – peculiarly successful the US, wherever caller scrutiny around schedule 13D has highlighted the power they clasp and the risks they face. Increasingly, galore ample passive managers person defaulted to applying wide “board-aligned” voting policies, often avoiding enactment for shareholder proposals connected biology oregon societal issues – including clime modulation plans oregon carnal clime risks.

In doing so, these providers hazard prioritising short-term show and firm statement implicit semipermanent resilience and their progressively engaged shareholder voice. For investors acrophobic with however their superior is stewarded implicit the agelong run, “close enough” is nary longer bully enough.

Thankfully, the systems and exertion underpinning shareholder voting are evolving and determination are promising signs that passive managers are keen to engage. A mechanics called pass-through voting enables investors to nonstop however a increasing proportionality of money managers formed votes connected underlying equities. In wealthiness absorption and backstage banking, the quality to transmit lawsuit preferences done these wrappers tightens fiduciary alignment, improves transparency and, erstwhile designed well, strengthens engagement with issuers. Regulators and marketplace participants person taken announcement – Vanguard’s September investor information report noted that lawsuit information successful its pass-through voting programme is acceptable to scope 10%, with eligible assets nether absorption reaching $1tn.