Asset owners aim to change company behaviour through proxy voting

Having set out clear stewardship principles, investors are now pressuring companies and asset managers to deliver results.
Asset owners aim to change company behaviour through proxy voting

Investors are bringing about meaningful change in how companies address key issues, particularly around independence and sustainability.

Malaysia's Employee's Provident Fund (EPF) regularly reviews its voting policies and in 2022 it revised its policy on the reappointment of any independent directors who have served on the board for more than nine years. It has also voted on the reappointment of chairmen of nomination committees, where there is one or more independent director who has served on the board for more than nine years.

The reasoning behind these challenges to the status quo is that without them, changing corporate behaviour in areas such as diversity and sustainability will be difficult to achieve.

In 2020 and 2021, the EPF participated in 228 AGMs and EGMs, involving 1,825 resolutions tabled by investee companies. Their votes were cast  EPF has voted as follows:

EPF Vote

No. of Resolutions












Reason to Against / Abstain



Independent Tenure Exceeded 12 years



Executive stock options of > 10%



ESO allocation for NED



No Women Directors on Board



Active Politician on Board



Directors of more than 80 y/o on Board



Other reasons






A spokesperson for the EPF told AsianInvestor that, as part of an effort to promote greater transparency, the Malaysian pension fund has started disclosing its voting decisions after shareholder meetings: “This is to create markets and public awareness on EPF’s voting policy so they will have clear understanding on the EPFs voting decisions.”

Similarly, Singapore sovereign fund GIC, for example, is intent on strengthening ESG practices and disclosures in its investee companies. Its dialogue with companies is focused on strengthening the board’s independence and diversity.

GIC is also using its voting ability in support of sustainability issues. For example, it is encouraging a pivot away from coal to renewables in a wind power company.

For instnace, when GIC invests in an energy company that might be partially dependent on coal-fired power plants to generate its electricity, it votes in favour of restructurng a company's portfolio in view of potential growth opportunities within the renewables market. This involves the firm eliminating all coal-fired power businesses and increasing renewable energy projects.


Japan’s Government Pension Investment Fund (GPIF) is prohibited from directly investing in equities, so it outsources all of its equity investing to external asset managers. All mandated managers are required to comply with GPIF’s proxy voting principles and to integrate ESG into their investment processes.

The passive nature of so much institutional investment means that institutions such as GPIF have to make it clear they expect passive managers to nonetheless engage with their investee companies.

Japan’s Stewardship Code indicates that “passive managers should implement engagement activities more actively from a medium- to long-term perspective, as it is critical for them to encourage investee companies to improve their corporate value given their limited options for selling shares.”

The largest passive fund managers, such as BlackRock, do discharge their governance responsibilities with increasing transparency, lest it be assumed they don’t engage. For example, during the 2021-22 proxy year, BlackRock did not support 2,529 directors at 1,521 unique companies globally, over concerns about independence, with a high concentration of such voting in APAC.

There is some logic to this outsourced governance role. As Australia’s Future Fund said in its most recent annual report, “Given the scope and complexity of corporate governance and proxy voting regimes in multiple international markets, our external investment managers advise us in exercising these voting rights. These managers are well placed to evaluate good corporate governance in investee entities.”

Nonetheless, the fund retains the ability in all cases to override the external manager’s recommendations. In aggregate, Future Fund participated in 4,859 shareholder meetings in 2020/21 and voted against company boards’ recommendations in 11.5% of all international resolutions.

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