When people think about responsible investing in public markets, the first focus is often on inclusionary or exclusionary criteria. Should we exclude a particular industry? Invest in a fund with a minimum ESG rating threshold? For pension trustees and plan sponsors, the practical focus is understandably on risk management, downside protection, and alignment with investment policies. But that framing can obscure one of the most practical tools available to strengthen oversight in public equities: stewardship.

Stewardship is often treated as an ESG add-on. For pension plans, with effectively perpetual timelines, it is not. It is a core risk-management and accountability tool that enables investors to use their rights and influence to protect long-term value. Stewardship includes engagement, proxy voting, escalation, and oversight of external managers. Within that broader framework, proxy voting is one of the most visible and practical tools available to investors for turning stewardship concerns into formal accountability.

An illustrative example is Wells Fargo’s extensive sales practices scandal, which led to billions of dollars in fines and an asset cap on the bank, and did not emerge out of nowhere¹. For years, investors were presented with questionable metrics and targets alongside clearly inadequate internal controls, yet few challenged the inconsistencies pointing to deeper structural failures. More active stewardship on human capital, incentive structures, and board risk oversight may have helped identify those red flags earlier and potentially avoid some of the worst outcomes. Proxy voting and stewardship cannot prevent every failure, but they can help investors focus earlier on weaknesses in oversight, compensation, and accountability.

Seen this way, proxy voting is a core stewardship escalation tool, not just a compliance exercise. After engagement with unsatisfactory results, investors may escalate by voting against management proposals, directors, or committee chairs, or by supporting shareholder resolutions asking for improved climate risk oversight or human rights risk assessments where progress has not occurred and material risks remain. But this can be ineffective if a pension plan’s external managers are not consistent in their proxy voting execution. 

A recent research paper on proxy voting divergence, published by OxProx – a social venture spun out of Oxford University Innovation – in collaboration with Kaivalya Research, reinforces why this matters. The analysis covered 464 investors, almost 19,000 companies, and voting patterns across 10 proposal categories. It found materially higher support from asset owners than asset managers on several categories of shareholder proposals, including supply chain, environmental, and social capital issues². The research does not tie individual asset owners to specific asset managers, but it does suggest a broader pattern. Plans may assume their managers are implementing stewardship in line with long-term priorities and beneficiary interests, while the actual voting record may tell a different story. 

A case study by OxProx and University Pension Plan Ontario (UPP) illustrates what this can look like in practice. Using portfolio-level voting analysis, UPP assessed alignment across external managers and identified where voting diverged from its expectations. The exercise gave UPP a more comprehensive view than reviewing individual manager policies or a sample of votes, helped identify alignment leaders and laggards, and created a baseline for engagement and future monitoring³. That kind of analysis is more useful than reviewing a written proxy voting policy alone. It helps trustees test whether delegated voting is aligned with the plan’s expectations across multiple external managers.

Good oversight does not begin with vote audits or manager comparisons in isolation. It begins with the plan being clear on what it is trying to protect and advance over the long term. That means identifying the governance principles, long-term risks, and stewardship priorities relevant to beneficiaries and the investment strategy. 

What a credible stewardship and proxy voting framework should include

At a minimum, trustees should ask whether the plan’s approach:

•  reflects the plan’s own governance principles and long-term investment beliefs 
• identifies the issues most material to long-term value, including not only board independence and executive compensation, but also areas such as climate, labour and human rights, supply chain oversight, Indigenous rights, and political activity 
• sets out how escalation should occur when concerns persist 
• creates a basis for overseeing external managers and holding them to account, not just stating preferences on paper 

Many plans delegate proxy voting to external managers for understandable reasons. But delegation does not remove fiduciary responsibility for oversight. It simply changes the form that oversight must take. Trustees still need enough clarity about their own stewardship expectations to judge whether a manager’s approach is thoughtful, credible, and aligned with the plan’s interests. 

What escalation should look like in practice

Escalation should not be improvised after the fact. It should be built into the stewardship framework from the outset.

In practice, that may include:

• private engagement with the company 
• communication of clear expectations and timelines 
• votes against management proposals where concerns remain unresolved 
• votes against responsible directors or committee chairs 
• support for shareholder resolutions seeking better disclosure, oversight, or policy change 

Not every issue should move through every step, and not every disagreement warrants escalation. But where risks are material and concerns persist, a plan should be able to point to a clear pathway from concern to accountability. That is one of the main reasons proxy voting matters. It is often the point where stewardship becomes visible and governance concerns become consequential.

One newer development is that some pension investors have begun to treat stewardship and voting misalignment as grounds for reallocating or terminating manager mandates. In 2025, the Dutch healthcare pension fund PFZW, advised by its manager PGGM, withdrew significant mandates from BlackRock and Legal & General (LGIM)⁴, while The People’s Pension in the UK shifted most of a £28 billion mandate away from State Street⁵. AkademikerPension in Denmark also terminated a DKK 3.2 billion mandate with State Street Global Advisors⁶. While each case had its own context, all were presented publicly as decisions tied in part to concerns about stewardship, sustainability, or voting alignment.

Testing alignment across multiple managers

For plans using more than one external manager, stewardship oversight becomes more complex. Different managers may approach the same issue in very different ways, leading to inconsistent and conflicting stewardship practices that dilute a plan’s impact.

That is why comparative analysis matters. Trustees should not only review a manager’s written policy. They should also look at actual voting records across managers to see:

• where managers are broadly aligned 
• where they diverge on material issues 
• whether patterns of divergence are explainable 
• whether stated stewardship commitments are matched by actual voting behaviour 

This is where vote audits and comparative reviews become especially useful. Done properly, they help trustees move beyond surface-level policy review and test whether manager voting programs are truly fit for purpose. They also create a much better basis for engagement with managers, because the discussion can be grounded in actual behaviour rather than general assurances. 

Formal proxy voting audits are not yet a standard, widely disclosed practice across pension plans. They are, however, emerging as a more structured oversight tool for asset owners seeking to test whether external managers’ actual voting behaviour aligns with stated stewardship expectations.

Why this deserves more attention

A more contested policy environment around proxy voting and proxy advisers is another reason trustees should pay closer attention to both policy and implementation. A December 2025 White House executive order directed U.S. regulators to review proxy-advisor rules, shareholder-proposal rules, conflicts, and reliance on proxy advice in ESG and DEI matters⁷, while early 2026 legal commentary suggested this could increase pressure on benchmark-style voting and push institutional investors toward more customized approaches⁸. For pension plans, the practical point is simple. Trustees need to understand who is influencing votes, how those recommendations are being used, and whether the approach remains aligned with the plan’s own stewardship expectations.

Seen this way, stewardship is not a side issue within responsible investment, and proxy voting is not just a technical compliance function. Together, they are practical tools for oversight, accountability, and long-term risk management in public equity portfolios. For pension trustees and plan sponsors, that is exactly why they deserve more attention, not less.

¹ Harvard Law School Forum on Corporate Governance. The Wells Fargo Cross-Selling Scandal. February 6, 2019.
https://corpgov.law.harvard.edu/2019/02/06/the-wells-fargo-cross-selling-scandal-2/

²OxProx. Market Data: Proxy Voting Divergence Report. April 7, 2026.
https://oxprox.org/proxy-voting-divergence-report/

³OxProx. OxProx Case Study: How UPP Evaluated Voting Alignment Among Its External Managers. November 12, 2025.
https://oxprox.org/oxprox-case-study-how-upp-evaluated-voting-alignment-among-its-external-managers/

⁴ Net Zero Investor - PGGM ditches mandates with L&G and BlackRock amid sustainability push - September 3, 2025 - https://www.netzeroinvestor.net/news-and-views/pggm-ditches-mandates-with-lgim-and-blackrock-amid-sustainability-push

⁵ Net Zero Investor. The People’s Pension moves £28bn out of State Street citing stewardship misalignment. February 26, 2025.
https://www.netzeroinvestor.net/news-and-views/the-peoples-pension-moves-28bn-out-of-state-street-citing-stewardship-misalignment

⁶ European Pensions. Denmark’s AkademikerPension sacks SSGA as asset manager. March 19, 2025.
https://www.europeanpensions.net/ep/Denmark-AkademikerPension-sacks-SSGA-as-asset-manager.php

⁷ The White House. Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors. Executive Order. December 11, 2025. https://www.whitehouse.gov/presidential-actions/2025/12/protecting-american-investors-from-foreign-owned-and-politically-motivated-proxy-advisors/

⁸ Skadden, Arps, Slate, Meagher & Flom LLP. White House Executive Order Aims To Restrict the Influence of Proxy Advisory Firms. December 16, 2025.
https://www.skadden.com/insights/publications/2025/12/white-house-executive-order-aims-to-restrict-the-influence-of-proxy-advisory-firms

Kelly Hirsch, President/Founder, Kaivalya Research Ltd.

Kelly Hirsch, CFA is the founder of Kaivalya Research, providing independent research and advisory services on responsible investing, governance, and long-horizon decision-making. She has institutional investment experience and governance-level expertise supporting oversight, risk frameworks, and stewardship practices. Her work focuses on translating complex governance signals—board effectiveness, incentive design, disclosure quality, and accountability mechanisms—into practical inputs for investment and fiduciary decision-making. Kelly has worked with stakeholders across the investment ecosystem and brings a pragmatic lens on how stewardship connects to real-world outcomes and risk management over time.