Market forces, not policy intervention, driving greater global shareholder engagement

Issuers and investors around the world believe that while stewardship codes have a role to play in promoting greater shareholder engagement, demand from issuers and investor’s clients is the real driving force behind greater engagement. This is the finding of global research by The Institute of Chartered Secretaries and Administrators (ICSA) with the assistance of senior staff at the Organisation for Economic Co-operation and Development (OECD).

Shareholder engagement: The state of play found issuers in developed markets believed that the most significant driver for improvement had been international trends for greater engagement, while change in ownership was the most frequent reason given for emerging markets. On their part, investors often cited increased client demand for active oversight or investment approaches that take account of environmental, social and governance (ESG) factors as being the main driver for their engagement.

The research also found in some cases that a willingness to engage was seen by many as cultural, with some noting that engagement was always easier in markets where it was considered the norm. Some respondents noted that policy interventions were something that might help to create an environment where engagement was possible, but without a change of mindset or other actions to enable engagement, their impact was limited.

“Importantly the research confirms that the global investment community (issuers, investors and advisors) believe that market forces, not regulatory intervention is the most effective means of promoting greater shareholder engagement,” says, ICSA Director General Tim Sheehy.

‘’Many issuers and investors also expressed concern that interventions might not always be responded to in the way that policy-makers hoped. They felt that if policy makers created a compliance or box-ticking mind-set for issuers, investors and advisors, it would create more problems than it solved.

‘’In fact, it was suggested that rather than trying to get those that do not wish to increase their levels of engagement to do so, it might be more productive for policy-makers to focus on removing barriers to engagement so that those issuers and investors that want to engage can do so more effectively. “Both issuers and investors mentioned various barriers including challenges around shareholder identification, vote confirmation and cross-border voting which made effective engagement more difficult,” Mr. Sheehy added.

A groundbreaking study taking in ten jurisdictions, Shareholder engagement: The state of play found that the amount of engagement between issuers and investors has increased in the last five years, and that this was true for issuers of all sizes and in markets at all stages of development. Over 60% of companies surveyed reported an increase in engagement, and 70% reported an improvement in the quality of that engagement.

Issuers prioritise engaging with those investors with significant holdings or who they believe might take a hostile position. Investors prioritise engagement largely on the value of the holding as part of their overall portfolio, the seriousness of their concerns and whether they think there is a realistic prospect of a positive outcome.

AGMs continue to challenge issuers and investors with both reporting resource constraints which are exacerbated by the fact that most general meetings, globally as well as in individual jurisdictions, continued to be concentrated together in a short period of time. In addition, engagement is also concentrated around the AGM though there has also been an increase in ongoing engagement in addition to the AGM season.

“Also highlighted is that there is more non-executive director (NED) involvement in developed markets, company secretaries are increasingly involved in discussions on governance related matters while the investor relations office still retains an overall coordinating role in most cases.

“Finally, while the most frequently discussed issues — performance, strategy, capital structure, M&A activity and leadership — have not changed, there are more issues on the agenda than was the case five years before. Issuers in all markets reported an increase in discussions with investors on the impact of technological change, while ESG issues are much more prominent in developed markets,” Mr Sheehy added.

For more information, please contact:

Tim Sheehy on +61 419 490 594 or Viv Hardy on +61 411 2087 951



The main component of the research was a survey of company secretaries or equivalent corporate representatives in listed companies in ten different markets (Australia; Brazil; Chile; Italy; Japan; Hong Kong, China; South Africa; Sweden; United Kingdom; and United States) and across eight business sectors. The markets and sectors selected represent different regions, levels of development, regulatory frameworks and company ownership structures. From the selection of 742 listed companies invited to participate in the research, including large and smaller firms, 116 responded to the survey.

After the survey was completed, we interviewed selected respondents to gain a more in-depth understanding of their experience of engagement. We also interviewed some institutional investors operating across different regions to see whether the survey findings matched their own experience.