Retail investors are due to play a much more significant role
influencing proxy votes with the introduction of As You Sow's and
Tulipshare's new investment platform.
In a Wednesday
shareholder advocacy organization As You Sow and U.K.-based fintech
Tulipshare announced a strategic partnership to "empower retail
investors globally to use their shareholder power in support of
resolutions on climate, racial justice, and other pressing issues."
The partnership will enable retail investors to vote for As You Sow
shareholder resolutions, which have this proxy season called on
leading U.S. companies such as Amazon, McDonald's, and Twitter to
strengthen their ESG commitments and reporting.
"This platform is coming at an opportune time given the rise in
shareholder proposal submissions and proposals that are going to
votes," Brian Valerio, senior vice-president, advisory group at
Alliance Advisors told me in an interview. "The retail investment
community is notoriously underrepresented at shareholder meetings, but
there is growing sentiment and evidence that retail holders are
particularly interested in ESG."
As You Sow submitted 90 resolutions with U.S.-listed companies this
proxy season, 60% of which were withdrawn prior to annual meetings for
agreements with companies. A further six went on to win majority
support from investors at companies such as Boeing, The Travelers Co.,
This new development is likely to bolster support for ESG shareholder
proposals and strengthen shareholder advocacy, which As You Sow noted
has "largely been in the domain of large institutions."
According to a 2020
report by Broadridge and
PwC, individual investor's votes only accounted for 28% of total
shares voted during the proxy season, but this is set to change.
"2021 was the year of the retail investor," Cas Sydorowitz, global CEO
at Georgeson, told me in an interview this week. "This shareholder
group could yield significant voting power. Companies with a large
retail investor base will require vastly different shareholder
engagement strategies and tactics."
In August 2021, Robinhood Markets
agreed to buy proxy
voting services provider Say Technologies for $140 million, with the
goal of boosting retail investor engagement with portfolio companies
and making it "easier for everyday investors to participate as
JP Morgan acquired shareholder engagement service OpenInvest that same
month to provide investors with the ability to "personalize their
Retail investors could change the game in more respects than just
support for ESG shareholder proposals. A growth in participation of
retail investors in shareholder meetings, proxy fights, and other
corporate actions may lead to issuers facing requests for new
information or different reporting.
Outreach to retail investors formed a critical part of Engine No. 1's
campaign at the oil giant last year and Trian Partners' 2017 proxy
contest at Procter & Gamble. The retail component of each company's
shareholder base was well over 30% and was thought to be less
supportive of management than expected based on past contests.
"Ultimately, the success of shareholder proposals largely hinges on
larger voting blocs held by institutional investors, however, the
power of retail shareholders should not be overlooked and may be
impactful depending on a company's shareholder profile," Valerio said.
"This new partnership reinforces the importance of companies
understanding their shareholder base and effectively communicating
with retail shareholders."
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