AICD submission on Greater transparency of proxy advice

Wednesday, 07 July 2021

On 3 June, the AICD provided a submission in response to the Commonwealth Treasury’s consultation paper: Greater transparency of proxy advice.

The AICD recognises that proxy advisers fulfil an important function in facilitating the informed voting of holdings in Australian listed entities. Proxy advice is relied on, and at times followed directly, by institutional investors in Australian listed entities. Proxy advisers have significant influence, advising a substantial proportion of company share registers and an even greater proportion of actual votes cast at general meetings. Proxy advice has a real impact on the strategies and governance of Australia’s listed companies, including remuneration, environmental, social and governance resolutions and board composition. Despite this, as the Treasurer has noted, there is currently very limited regulation of how proxy advice is formulated, provided, used and disclosed in Australia.

The AICD supports the development of appropriate regulatory standards for this important industry. The AICD supports consultation options to facilitate engagement between issuers and proxy advisers, require suitable licensing for the provision of proxy advice, and to improve disclosure of trustee voting. The AICD does not support the option to mandate arm’s length independence of proxy firms from superannuation funds. The AICD’s submission also encourages consideration of an investment stewardship code (on an ‘if not/why not’ basis) and recommends that the Australian Shareholders’ Association continue to be exempt from regulation of the proxy advice industry as a whole.

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