Retail investor voting on the rise, study finds

Retail investor voting on the rise, study findsNew technology, regulatory changes and a shift in values are all contributing to the increased voting activity of retail investors, according to a recently published whitepaper.

The report, The Continued Empowerment of the Retail Shareholder, was published by fintech Broadridge - also a provider of proxy voting technology.

It examines the trends driving proxy voting and corporate governance activity of retail investors across Europe.

Two regulatory developments, the Capital Markets Union and the Shareholder Rights Directive II, are both contributing factors, as is the rise of ESG and the idea that investors should take more responsibility for the activity of the companies within their portfolios.

But the emergence of digital proxy voting technology has also been a critical catalyst given that the proxy voting process was previously riddled with inefficiencies to the point where many investors were unable to tell if their vote had even been cast, let alone if it had been correctly attributed.

“The evolving regulatory framework in Europe to support both ESG and shareholder voting, both for equities and funds will more than likely encourage even higher retail activity in the longer term,” said Demi Derem, general manager of international corporate governance, digital transformation and market innovation at Broadridge. 

“Equipped with greater awareness and transparency around ESG credentials, the investing public will be more inclined to vote on key company issues such as board diversity and environmental criteria.”

“It’s fascinating to see how the EU’s strategic focus on the retail investor as a pillar of its Capital Markets Union and the emphasis on governance as part of the ongoing review of SRD II are changing key dynamics for these investors across the region,” said Virginie O’Shea, founder of Firebrand Research and a contributor to the whitepaper.

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