Institutional Investor Engagement and Stewardship

The evolution of the institutional investor landscape

The OECD Institutional Investor Engagement and Stewardship report examines how institutional investors engage with listed companies and how effective stewardship can strengthen the long-term efficiency and resilience of capital markets.

Institutional investors play a key role in capital market efficiency by supporting price discovery, capital allocation, and corporate discipline. Asset managers hold 65% and 59% of the listed equity in the United States and the United Kingdom, respectively, and they hold at least 30% of the listed equity in several other advanced markets (Figure 1). The increased ownership by asset managers is also visible in emerging markets such as South Africa (28%), Brazil (23%) and India (21%). Asset owner institutions hold 41% of the listed equity in Luxembourg and at least 10% in several other markets.

Figure 1. Public equity holdings of asset managers and asset owner institutions in 2024

Source: OECD (2025), Institutional Investor Engagement and Stewardship, OECD Publishing, Paris, https://doi.org/10.1787/a4902cee-en.

Non-domestic institutional investors hold a larger share of equity than domestic ones in almost 80% of OECD, G20 and FSB economies. However, countries such as Argentina, China, South Africa, and the United States are notable exceptions, where domestic institutional investors hold larger equity stakes than foreign investors (Figure 2).

Figure 2. Domestic and non-domestic institutional ownership in 2024

Source: OECD (2025), Institutional Investor Engagement and Stewardship, OECD Publishing, Paris, https://doi.org/10.1787/a4902cee-en.

Institutional investor ownership in public equity markets has become increasingly concentrated, a trend mirrored in the assets under management (AUM) of the world’s largest asset managers (Figure 3). Over the past decade, the top 20 firms’ AUM has risen 84%. Their share of total AUM across all financial institutions grew from 32% to 38% over the same period. While this rise may seem modest, a longer historical view shows an even steeper upward trend, underscoring the expanding role of institutional investors in today’s capital markets.

Figure 3. Asset under management of the largest 20 asset managers

Source: OECD (2025), Institutional Investor Engagement and Stewardship, OECD Publishing, Paris, https://doi.org/10.1787/a4902cee-en.

The report also examines the important differences between active and index investors in terms of the strategies they use, which can vary in diversification, depth of analysis, time horizons, and engagement levels.  

Active investors, who already analyse company fundamentals, face lower marginal costs to engage. By contrast, index investors must undertake additional research to form informed views, making engagement more costly. As a result, voting and engagement practices vary widely – from well-informed stewardship to minimal involvement in investee companies’ corporate governance.

In 2024, the managed assets of investment funds, including open-end and exchange traded funds, amounted to USD 65 trillion, a 76% increase from USD 37 trillion in 2015 (Figure 4, Panel A). Today, index investment strategies, which account for USD 26.7 trillion of AUM (Figure 4, Panel A), concentrate the bulk of their investments in equity, which totals almost 80% of the AUM, and in fixed income with 18% (Figure 4, Panel B). Non-index investment funds represent USD 38.3 trillion of the total AUM within the investment fund sector (Figure 4, Panel A). Non-index funds allocate almost 40% of their assets to equity investments, followed by fixed-income securities (37%) (Figure 4, Panel B).

Figure 4. Investment funds’ assets under management

Source: OECD (2025), Institutional Investor Engagement and Stewardship, OECD Publishing, Paris, https://doi.org/10.1787/a4902cee-en.

Practical aspects of institutional investor engagement

Engagement takes multiple forms. Active investors typically focus on company-specific issues, while index investors often use topic-based engagement on broad themes. Engagement can be individual or collaborative, and it may occur privately (e.g., meetings, letters) or publicly (e.g., statements, shareholder proposals).

While many institutional investors report successful engagements, private engagement is difficult to measure. Public engagement, however – especially in the form of shareholder resolutions – is more visible. These resolutions are typically used as an escalation tool when private efforts have not achieved the desired outcome.

The report analyses 2024 shareholder meeting data from large listed companies in selected jurisdictions, showing whether proposals came from management or shareholders and their outcome (i.e., if approved, rejected, or not put to a vote). Overall, the report finds management-initiated proposals are more frequent and tend to be approved, whereas shareholder-initiated proposals are comparatively rare and more often either fail or are not voted on. This pattern is consistent across the thirteen selected jurisdictions, although the regulatory requirements within each jurisdiction may differ.

Main characteristic of regulatory frameworks

Another key theme is how jurisdictions regulate stewardship. These frameworks typically combine laws, codes, self-regulatory rules and guidance. While the mix of public and private requirements and recommendations varies across jurisdictions, the core goals remain the same: improving governance, increasing transparency, and addressing conflicts of interest.

Many jurisdictions have specific requirements or recommendations for monitoring investee companies, maintaining the effectiveness of monitoring when outsourcing the exercise of voting rights and engaging on sustainability matters.

The report highlights the growing importance of stewardship codes. These codes set principles for investor–company engagement, often using a “comply or explain” model, and increasingly incorporate sustainability expectations.

Fiduciary duties and limits to stewardship

While institutional investors may be able to influence sustainability through capital allocation and stewardship efforts, there are clear limits to what they can achieve with investee companies. The report examines these limitations.

The core of fiduciary duty is in theory simple: to always put the client’s best interests first. While recognising differences between jurisdictions, this would typically mean institutional investors have a legal duty of care and loyalty to clients when making investment decisions and engaging. Therefore, institutional investors cannot pursue sustainability goals at the expense of financial returns without a clear client mandate.

The report underscores the essential role of clear mandates between asset owners and asset managers. When mandates are vague – for example, on whether to vote on all resolutions or engage on specific sustainability issues – institutional investor discretion increases, making fiduciary duty even more critical in ensuring actions align with the client’s best interests. However, as courts and regulators rarely second guess decisions unless there is clear case of neglect or conflicts of interest, the enforcement of fiduciary duties alone may not be sufficient. Transparency and disclosure from institutional investors regarding their stewardship activities will, therefore, always be key.

The stewardship landscape: status and policy considerations

The report presents two challenges. First, how to mediate conflicts between the expectations and information needs of investors and companies based in different jurisdictions given in almost 80% of OECD, G20 and Financial Stability Board (FSB) economies, foreign institutional investors own more shares in listed companies than domestic ones. Second, what disclosure rules should apply to the largest institutional investors to ensure they fulfil their fiduciary duties and respond to their clients’ sustainability concerns.

Building on these two challenges, the report offers three policy considerations. First, further co-operation in identifying good policies and practices for the development of voluntary and regulatory frameworks that foster effective stewardship is needed. Second, greater convergence in sustainability-engagement frameworks could enhance alignment between environmentally and socially focused asset owners and managers at the mandate and contractual stages, improving capital-market efficiency. Third, effective engagement frameworks could reduce concerns about institutional investors setting de facto environmental or social rules, while legitimising their action on financially material issues when acting in line with their fiduciary duties.

This post is based on an OECD report launched on December 2, 2025.The Institutional Investor Engagement and Stewardship report examines how institutional investors engage with listed companies and how effective stewardship can strengthen the long-term efficiency and resilience of capital markets. It presents trends in institutional ownership and the asset management industry; reviews current engagement practices and mechanisms; and analyses stewardship-related regulatory frameworks, including fiduciary duties. Although the regulatory frameworks governing stewardship have evolved in many jurisdictions over the last decade, frameworks have not always kept pace with these challenges. This report highlights the need for enhanced international co-operation to identify and promote both voluntary and regulatory approaches that support effective stewardship.

Link to the full report can be found here,