Exit vs voice: a question of scalability?

Lucia Alessi, Yumeng Gao, Sergio Garcia-Vega, Andreas Hoepner and Fabiola Schneider

Chapter 18 in Handbook of ESG Investing, 2026, pp 450-459 from Edward Elgar Publishing

Abstract: This chapter explores the scalability of shareholders’ proxy voting practices through an extensive analysis of historical voting records. First, it reveals a stark imbalance in voting dynamics, with shareholder-sponsored proposals significantly outnumbered by management-sponsored votes: 98% of proposals globally between the years 2016 to 2020 were management sponsored. Yet when focusing on climate-related proposals, shareholders emerge as the primary sponsors. Next, we uncover substantial scalability challenges. Only 6% of companies within the top tercile of the Russell 3000 index (the largest thousand firms) received at least one climate-related proposal. This engagement drops to approximately 0.5% and 0.1% in the second and third terciles, respectively. These results underscore a potential misalignment between the climate objectives of asset owners and the stewardship practices of asset managers, particularly in their use of proxy voting as a governance tool. This adds to the ongoing Voice versus Exit debate by highlighting scalability issues for the engagement route.

Keywords: ESG stewardship; Proxy voting; Shareholder activism; Voting scalability (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035322770
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