Stewardship is evolving. Amid shifting regulation, rising shareholder expectations, and intensified debate around ESG, shareholder voting has become both more strategic and more scrutinised. But shareholder democracy need not simply drift with the tide. It can be reclaimed.
For years, one of the dominant theories of change in stewardship was simple: engage the biggest passive providers, and they would use their enormous voting power to deliver long-term value for all. This idea is elegant but has become increasingly imperfect. These providers are subject to significant regulatory oversight and reporting requirements – particularly in the US, where recent scrutiny around schedule 13D has highlighted the influence they hold and the risks they face. Increasingly, many large passive managers have defaulted to applying broad “board-aligned” voting policies, often avoiding support for shareholder proposals on environmental or social issues – including climate transition plans or physical climate risks.
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In doing so, these providers risk prioritising short-term performance and corporate consensus over long-term resilience and their increasingly engaged shareholder voice. For investors concerned with how their capital is stewarded over the long run, “close enough” is no longer good enough.
Thankfully, the systems and technology underpinning shareholder voting are evolving and there are promising signs that passive managers are keen to engage. A mechanism called pass-through voting enables investors to direct how a growing proportion of fund managers cast votes on underlying equities. In wealth management and private banking, the ability to transmit client preferences through these wrappers tightens fiduciary alignment, improves transparency and, when designed well, strengthens engagement with issuers. Regulators and market participants have taken notice – Vanguard’s September investor participation report noted that client participation in its pass-through voting programme is set to reach 10%, with eligible assets under management reaching $1tn.
No-action requests
The urgency surrounding shareholder voice is underscored by a troubling new reality: No-action requests. This is a mechanism through which a company can avoid a proposed shareholder resolution. In the 2025 proxy season, the US Securities and Exchange Commission (SEC) saw a 35% rise in no-action requests, continuing a multi-year climb. Companies prevailed in most cases, with the SEC granting relief on nearly two-thirds of the proposals challenged, particularly those touching on environmental and social issues. This highlights a potential asymmetry: as investors seek to exert more influence on long-term risks, companies are finding procedural ways to keep such debates off the ballot.
LGT Wealth Management was the first European wealth manager to adopt pass-through voting. The move was shaped not only by the fact that most client assets are held through third-party funds, but also by the kind of clients we serve. Our private clients choose us for a long-term, high-conviction approach to investing, and expect their capital to be stewarded with that same focus, regardless of the vehicle its invested in. We have long maintained a direct equity buy list, for which we exercise voting rights directly and through which we have built deep expertise in analysing and executing those votes. Over time, it became inconsistent to vote one way on our direct equities, while allowing external managers to decide on fund holdings in those very same companies. Pass-through voting brings these two worlds together, aligning more assets under a single, principled voting framework and allowing us to use our full weight as shareholders to back the positions that reflect our clients’ values.
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By GlobalDataIn the first half of 2025, our pass-through voting programme enabled us to vote on more than 800 companies, comprising over 11,000 individual proposals, 600 more companies than we would reach via direct voting. In 17.5 per cent of cases, our vote diverged from the recommendations of the delegated manager, often reflecting our more ambitious positions on climate accountability, board composition, or shareholder rights.
What banks need to know
Private clients increasingly expect institutional-grade service, not just in terms of financial performance, but also in how their capital is stewarded. Banks are in a unique position to meet this demand, blending long-term relationships with the kind of stewardship and research expertise traditionally associated with large asset managers.
This is especially important as the market continues to shift towards lower-cost, passive investment products. While these can offer efficiency and diversification, they must not come at the expense of fiduciary care or long-term responsibility. Clients rightly expect high standards across all vehicles whether directly held or fund wrapped.
Banks that invest in robust voting frameworks, clear reporting, and thoughtful policy design can differentiate themselves in a space where passive scale is growing, but stewardship expectations are not retreating. Pass-through voting is one of the tools that can help ensure consistency, transparency, and alignment with client mandates even within pooled or externally managed holdings. In a competitive market, this is not just a governance issue but where clients can begin to see a commercial edge.
Siobhan Archer, global stewardship lead, LGT Wealth Management
