CalPERS clarifies proxy voting process amid attacks on advisory firms

The CalPERS Board of Administration convened on June 18, 2025, to address critical issues surrounding the annual proxy voting process and the role of proxy advisory services. The meeting began with a discussion led by a board member emphasizing the significance of proxy voting for institutional investors like CalPERS, particularly in light of recent media scrutiny and political rhetoric targeting proxy advisory firms.

The board member highlighted that criticism has intensified, with some prominent figures in the financial sector labeling proxy advisory firms as detrimental to the investment landscape. This sentiment has been echoed by members of Congress proposing regulatory reforms through the Securities and Exchange Commission (SEC) that could increase costs and legal risks for investors, potentially discouraging their use of proxy advisory services.

Amidst these criticisms, the board member defended CalPERS' reliance on proxy advisory firms, asserting that such claims misrepresent the organization's practices. In 2024, CalPERS voted at over 10,000 shareholder meetings, casting approximately 95,000 individual votes across 63 countries. The board member underscored that proxy voting is a vital tool for influencing corporate governance, addressing issues such as executive compensation, board independence, and diversity.

CalPERS' voting decisions are guided by established governance and sustainability principles, which provide a framework for their actions. The board member clarified that while CalPERS utilizes research from various providers, including proxy advisory firms like ISS, the organization does not solely depend on their recommendations. Instead, the investment team conducts thorough research to understand the companies in which they invest before making voting decisions.

The meeting concluded with a reaffirmation of CalPERS' commitment to its fiduciary responsibilities and the importance of transparent communication regarding its proxy voting processes. The board plans to continue addressing the misconceptions surrounding its use of proxy advisory services and to advocate for the rights of shareholders in the face of growing criticism.