Best Practice Principles Group
Best Practice Principles Group
Introduction
The Best Practice Principles Group (BPPG) is an industry group that maintains the Best Practice Principles for Providers of Shareholder Voting Research & Analysis (the Best Practice Principles or BPP), a voluntary code of conduct for organisations that provide shareholder voting research and analysis (often referred to as proxy advisers).[1][2]
The principles aim to enhance transparency, service quality, and accountability in the proxy advisory industry.
Background
The BPPG was formed in February 2013 following a report by the European Securities and Markets Authority (ESMA), which encouraged the development of an industry code of conduct to improve transparency and address conflicts of interest and other concerns.[3]
History
The first edition of the Best Practice Principles was published in March 2014 following a consultation process initiated by ESMA.[4]
In 2015, ESMA reviewed the development of the principles, noting progress but recommending improvements in conflict-of-interest disclosures in a follow-up report.[5] Subsequent governance guidelines and feedback procedures were published in 2016.[6][7]
A major revision occurred in 2019, following a multi-stage review process that included public consultation, an independent review, and stakeholder input.[2][8]
The Principles
The latest revision of the BPP set out three core principles that signatories commit to follow:[2][9]
- Service Quality: Signatories should ensure that their services are delivered with high standards of quality, accuracy, and reliability.
- Conflict of Interest Management: Signatories must identify, disclose, and manage any actual or potential conflicts of interest that could influence their research or recommendations.
- Communication Policy: Signatories should have clear policies for communicating with stakeholders, including issuers and investors, to promote transparency and understanding of their processes and recommendations.
Signatories apply these through public “comply or explain” reporting.
Signatories
As of November 2024, signatories include:[10]
- EOS at Federated Hermes
- Glass Lewis
- Institutional Shareholder Services (ISS)
- Minerva Analytics
- Pension & Investment Research Consultants (PIRC)
Governance and Oversight
The BPPG is governed by the BPP Committee, comprising representatives of each signatory organization.[10] Signatories publish annual public compliance statements, which are subject to review by the BPP Oversight Committee.[2]
Established in 2019, the BPP Oversight Committee[11] was created to provide an annual independent review of the monitoring of the BPP[12] and of the public reporting of each BPP Signatory.
Commentary and Reception
In 2015, ESMA reviewed the principles, noting improvements in transparency but recommending stronger conflict-of-interest disclosures.[13]
In a 2023 report on the influence of proxy advisers in the UK market, the Financial Reporting Council (FRC) noted that awareness of existing regulatory and voluntary frameworks such as the Best Practice Principles was limited among companies.[14]
France’s Autorité des marchés financiers (AMF) highlighted the growing influence of the BPPG over the governance of voting advisers in its 2020 governance report.[15]
See Also
- https://en.wikipedia.org/wiki/Proxy_advisory_firm
- https://en.wikipedia.org/wiki/Corporate_governance
- https://en.wikipedia.org/wiki/Shareholder_rights
References
- ↑ "Home". Best Practice Principles for Shareholder Voting Research. 2019-07-22. Retrieved 2026-01-08.
- ↑ 2.0 2.1 2.2 2.3 Governance, The Harvard Law School Forum on Corporate (12 August 2019). "Best Practice Principles for Shareholder Voting, Research & Analysis". https://corpgov.law.harvard.edu/. Retrieved 2026-01-08. Unknown parameter
|url-status=ignored (help); External link in|website=(help) Cite error: Invalid<ref>tag; name ":0" defined multiple times with different content - ↑ "Final Report: Feedback statement on the consultation regarding the role of the proxy advisory industry" (PDF). 19 February 2013. Unknown parameter
|url-status=ignored (help) - ↑ "Best Practice Principles for Providers of Shareholder Voting Research & Analysis" (PDF). March 2014. Unknown parameter
|url-status=ignored (help) - ↑ Follow-up report on the development of the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (2015/1887) (PDF) (Report). European Securities and Markets Authority (ESMA). 18 December 2015. Retrieved 7 January 2026.
- ↑ BPP Group Membership and Governance Guidelines (PDF) (Report). Best Practice Principles Group. July 2016. Retrieved 7 January 2026.
- ↑ Feedback and Complaints Procedure (PDF) (Report). Best Practice Principles Group. 17 June 2016. Retrieved 7 January 2026.
- ↑ Mooney, Attracta (22 July 2019). "Proxy advisers sign up to tougher scrutiny". Unknown parameter
|url-status=ignored (help) - ↑ Cite error: Invalid
<ref>tag; no text was provided for refs named:1 - ↑ 10.0 10.1 "BPP Committee". Best Practice Principles for Shareholder Voting Research. 2013-09-30. Retrieved 2026-01-08.
- ↑ "Best Practice Principles (BPP) Oversight Committee". Best Practice Principles for Shareholder Voting Research. 2022-09-01. Retrieved 2026-01-08.
- ↑ Maddern, Kerra (2025-11-24). "Proxy voting advisory and research groups continue to be more transparent, report shows". University of Exeter News. Retrieved 2026-01-08.
- ↑ "Report: Follow-up on the development of the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (2015/1887)" (PDF). 18 December 2015. Unknown parameter
|url-status=ignored (help) - ↑ "FRC publishes research on impact of proxy advisers and ESG ratings agencies on companies and investors". FRC (Financial Reporting Council). Retrieved 2026-01-08.
- ↑ "2020 Report on Corporate Governance and Executive Compensation in Listed Companies" (PDF). 24 November 2020. Unknown parameter
|url-status=ignored (help)
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