State Street and Vanguard Voting Policies updated

Key Takeaways

• State Street and Vanguard’s 2026 policies are largely unchanged on executive pay.
• Reduced ESG Prescriptions and focus on US engagement: State Street is reducing focus on ESG and DEI disclosures, adopting a “listen-only” model for climate targets with focus shifting to engaging with US companies.
• Increased Board Autonomy: Vanguard has increased board autonomy by treating independent leadership as an internal board matter and softening stance on voting against remuneration committees.
• These updates continue to show preference for a performance-first approach.

Based on historical data and recent market analyses, State Street and Vanguard—often along with BlackRock—are among the largest shareholders in the Australian share market.  These large passive index managers including Vanguard, BlackRock, and State Street were estimated to own roughly 10% to 15% of Australia’s listed stocks, including the top ASX 200 companies. Each of these firms often appear in the top 10 shareholders of many individual ASX 200 companies, driven by the popularity of index-tracking funds such as the Vanguard Australian Shares Index ETF (VAS) and the SPDR S&P/ASX 200 ETF (STW). These managers hold large stakes because their passive funds must own the largest companies in the S&P/ASX 200 index.

And these large funds vote on all resolutions, so it is good to know how they are likely to vote on executive and board remuneration matters.

State Street Investment Management (rebranded to State Street Global Advisors (SSGA)) recently released updated Global Proxy Voting and Engagement policy for 2026.

Guidelines in relation to remuneration were almost identical to prior, with the exception of now explicitly stating that financial performance may be considered by comparing a company’s Total Shareholder Return (TSR) relative to GICS sector peers.

Changes of note include a significant dialling down of the focus on ESG disclosures.

Language surrounding board composition is more generalised, shifting away from naming DEI categories. Criteria on board composition which will flag disclosures for further review include non-US companies in certain non-US indexes that do not meet established board diversity thresholds, and underperforming companies on TSR relative to GICS sector peers in certain established markets.

The Appendix previously detailed assessment criteria for commonly requested disclosure topics including climate transition, DEI, and political contributions. For the ASX listed companies considering re-locating to a US exchange and seeking US investors, some recent Trumpian regulatory changes would be music to the ears (despite what may be thought of other changes). The 2026 State Street policy now details policy guidelines for engagement with portfolio companies that are US public companies and emphasises a commitment not to ‘dictate or pressure’ companies on these policies. In addition, strict guidelines dictate “listen-only” for discussions on contested director elections, climate transition plans and emissions targets, or changes to capital allocation. State Street now state that it will not apply or discuss specific diversity targets or thresholds for US companies. This does not apply to ASX listed companies, but based on prior experience it is unlikely the State Street approach will vary for ASX listed companies.

Vanguard policies tend to be more tailored than the State Street polices. It has released their proxy voting policy for Australian and New Zealand portfolio companies. Their policy on remuneration remains broadly consistent with a continued focus on case-by-case assessment. The only softening in recent years includes the removal of the explicit statement that Vanguard will generally vote against remuneration committee members when voting against the remuneration report in two consecutive years has not lead to meaningful improvements.

Generally the main development to Vanguard policy is a simplification in regard to board composition and effectiveness. The policy states that determining appropriate independent board leadership should be ‘within the purview of the board’ and therefore generally recommends a vote against proposals to separate CEO and chair roles. This differs to prior versions of the policy that was supportive of separation.

Sustaining board led governance through 2026

Boards can use this period of stability to reinforce existing pay frameworks and leadership models and ensure that they remain aligned to strategy.

See HERE for the State Street Global Proxy Voting and Engagement Policy, and HERE for the Vanguard Proxy voting policy for Australian and New Zealand portfolio companies.

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