It’s a shame that the surge in enthusiasm for investments with high environmental, social and governance standards hasn’t yet been matched with a rise in shareholder participation among private investors.
While many may dismiss voting at annual general meetings (AGMs) thinking their votes won’t count, private investors are a rising force and play an increasingly important role in holding companies to account.
According to the Office for National Statistics, the proportion of London-listed shares held by UK-resident private investors was 13.5 per cent in 2018, up from 10 per cent in 2012. And this will have increased over the past 12 months as record numbers of new accounts have been set up across platforms.
Aim numbers are even more striking, with research firm Hardman & Co reporting that 35 per cent of stocks listed on Aim were held by UK-based private investors in 2019.
By engaging with companies and attending virtual AGMs, shareholders have an opportunity to voice their opinions and vote on issues of key importance to the running of companies, including topics such as executive pay, diversity or the price of a takeover deal.
Companies are even starting to take their climate policies to shareholders. Unilever (ULVR), for example, has become the UK’s first blue-chip company to invite its shareholders to vote on its climate change transition action plan before a vote at its AGM on 5 May. Part of its plan is to achieve zero emissions from its own operations by 2030.
The sad thing is how few private investors bother to vote. According to investment platform Hargreaves Lansdown (HL.), on average, as few as 0.5 per cent of its customers vote for standard resolutions at AGMs. interactive investor users prove a little more engaged, but only 8 per cent of its customers who had registered to vote at AGMs did so last year.
A big part of the problem is that platforms do little to encourage people to take part in company AGMs. Indeed, a spokesperson from AJ Bell said it doesn’t encourage people to vote because the execution-only platform is not authorised to give advice.
Most platforms, such as Hargreaves Lansdown, AJ Bell, Bestinvest and Charles Stanley Direct, will allow you to vote free of charge if you email them your voting instruction, send a secure message or phone them at least five days before the AGM.
interactive investor and Fidelity Personal Investing have an online voting service which you can sign up to and get notification of events. Freetrade doesn’t have any provision to vote but if you contact the app directly it will support this.
While the big institutions hold the power and most AGM votes, this shouldn’t put you off – especially as they can be influenced by advisory services such as Institutional Shareholder Services (ISS). These agencies have come under scrutiny for issuing poor advice in some cases, as we mentioned last year in Why shareholders' votes matter. ISS had discouraged shareholders from supporting a vote on granting Personal Assets Trust's (PNL) managers the authority to issue more shares than they were able to at the time.
And, as ShareSoc’s non executive director Paul De Gruchy points out, as we expect institutional investors to hold boards to account and exact high governance standards, private investors must play their own part in the process.
