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Responding to a discussion paper on the development of the proxy advisory industry launched by the European Securities and Markets Authority (ESMA), the Universities Superannuation Scheme (USS) in the UK said it supported a requirement for users of proxy advisory firms to disclose publicly how they employ such services.
"The user should be required to publicly disclose how they employ the services of proxy advisory firms and the extent to which the signatory follows, relies upon or uses the recommendations made by such services", it said. "The disclosures would encourage regular reviews of the suitability of service providers and be a low-cost solution to ensuring accountability and continued improvement in the proxy advisory industry."
Asset manager Hermes also called on ESMA to increase the accountability of proxy advisors, simplify voting systems to lower entry barriers, and incentivise investors for the continual stewardship of their holdings.
"We are concerned that the current structure of the proxy advisor market, as well as some widespread investor behaviours, could lead to overreliance on proxy advice and create potential for principal-agent conflicts", it said in its response to the discussion paper.
In Spain, however, the Association of Collective Investment Schemes and Pension Funds (INVERCO) argued that the "most reasonable" option would be the adoption of a European code for proxy advisors subject to the 'comply or explain' principle.
According to INVERCO, this code should contain "precise and weighted" guidelines and recommendations, so that all proxy advisors subscribing to it are bound to comply with the code, or explain why and to what extent they have failed to do so.
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