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EuropeanIssuers agree with ESMA that any regulation should seek to avoid the effect that responsibility for voting and effective stewardship is shifted from investors to proxy advisers.
Issuers believe that the standards followed by the proxy advisory firms are not always clear, which can lead to misunderstandings. They support greater transparency of any potential conflicts of interest, as well as publication by proxy advisory firms to issuers or their national associations of guidelines for the relevant local markets, to help clarify any misunderstandings of national law.
One helpful outcome of the disclosures under the UK Stewardship Code has been to clarify to some degree the extent to which the votes being cast are made in accordance with the proxy advisor’s own policy, or that of the underlying fund manager or pension fund. In terms of dialogue with investors, EuropeanIssuers are supportive of the disclosure of the actual investors’ own voting policies and guidelines, as well as of the guidelines of the proxy advisers. However, the ability for companies to engage in dialogue with investors may be hampered by local shareholder identification laws, which vary considerably across Europe.
On balance, either an EU-wide industry code or an EU recommendation which can be implemented in national codes or regulation as appropriate is the favoured option of a majority of EuropeanIssuers' members, not binding EU-regulation. Finally, EuropeanIssuers believe that ESMA should seek to understand and mitigate any potential costs on investors that could have a negative impact on voting attendance rates at company meetings.