LGT Wealth Management has announced it is adopting a new policy that will give fund investors a direct say in the proxy voting process.
The UK-based wealth management firm, which is part of the LGT Group owned by the Princely Family of Liechtenstein, revealed today that it is implementing a pass-through voting system, becoming the first company in Europe to make the move.
This approach allows investors to have a greater say in the proxy process, as asset managers can give them more control over the key decisions regarding the public companies they own or invest in.
Pass-through voting has already been adopted by US-based firms including BlackRock, which was the first in the industry to launch the technology, in 2022. Other wealth management giants such as Vanguard Group and State Street Global Advisors have since followed suit.
The pass-through voting system offers an alternative to the centralised approach commonly used for wealth stewardship and proxy voting, where asset managers follow standardised policies for all clients. According to LGT, this and the growth of passive investing resulted in a small number of large asset managers accumulating ‘significant voting power over public companies,’ preventing shareholders from participating in important decisions about their investments.
Mark Johnson, the Head of Institutional Clients at Asset Management, Legal & General commented: ‘Many investors, especially those focused on sustainability issues, want their investments to align with their values. Pass-through voting allows greater freedom to vote in accordance with their own priorities and preferences.’
‘This is an important move for us,’ said Siobhan Archer the Global Stewardship Lead at LGT. ‘By adopting pass-through voting, we can better uphold our commitment to enhancing and preserving assets for our clients while creating long-term value for the economy, environment and society.’
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LGT anticipates that the adoption of this new approach will allow client views on stewardship to be taken into account ‘within a range of passive pooled-fund investments in client portfolios,’ the company said. ‘This marks a significant milestone in the firm’s stewardship strategy and commitment to sustainability, allowing its voting policy to cover an increasing share of portfolios, as the firm looks to offer clients broader alignment from capital allocation to voting on resolutions.’
Leading the way for European firms
LGT’s decision to adopt the new voting system comes amid growing regulatory pressure in the UK for trustees and wealth managers to take greater ownership of stewardship practices rather than delegating responsibilities to asset managers, the firm noted.
‘We believe pass-through voting is rapidly becoming a key mechanism in investors’ stewardship toolkits and an effective way to complement our engagement efforts with managers,’ Archer said.
[See also: Choosing the right private client wealth management for you]
