For over a decade, the narrative of corporate governance was focused on the concentration of power. The “Big Three”asset managers – BlackRock, Vanguard, and State Street – along with the two dominant proxy advisers, ISS and Glass Lewis, were seen as the central pillars of a “unified stewardship” model. Through standardized benchmark policies and centralized stewardship teams, these institutions exerted coordinated, often homogenous influence over public companies.
That era is over. On October 15, 2025, Glass Lewis made a surprising announcement: Beginning in 2027, it would discontinue its long-standing benchmark proxy-voting guideline. Citing the rapid advancement of artificial intelligence and the growing divergence of investor preferences, the firm declared it would shift to providing “multiple perspectives,” namely “management-aligned,” “governance fundamentals,” “active owner,” and “sustainability,” rather than a single house policy.
As we discuss in a new article, the unitary voice of institutional stewardship is disintegrating, driven by political pressure, diverging investor preferences, and internal resource constraints. This shift creates a new reality of fragmented governance, characterized by three distinct fractures: preference fragmentation, institutional fragmentation, and rule fragmentation.
The Three Dimensions of Fragmentation
The first dimension, preference fragmentation, reflects the growing divergence among investors on values, time horizons, and the role of environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) factors.
This divergence has deepened markedly around ESG issues. After peaking in 2023, institutional support for E&Sproposals declined sharply in 2024 and 2025. Vanguard voted in favor of zero E&S proposals for two consecutive years, while BlackRock supported only a low single-digit percentage of E&S proposals in 2025. By contrast, in 2025, retail investors exhibited higher average support for E&S proposals than institutional investors.
Institutional fragmentation has increased as a result The Big Three are segmenting their centralized stewardship models. Effective January 1, 2025, BlackRock split its stewardship function into two distinct units: BlackRock Investment Stewardship (BIS) for index funds and BlackRock Active Investment Stewardship (BAIS) for active funds. Vanguard followed suit in 2026, finalizing a split between Vanguard Capital Management and Vanguard Portfolio Management stewardship teams. State Street, similarly, divided its operations into a general stewardship team and a specialized “Sustainability Stewardship Service”.
While these firms have increased their stewardship headcounts since the seminal 2019 study by Bebchuk and Hirst, the growth in personnel has not kept pace with the scale of their responsibilities. As shown in Table 1A, the volume of proposals and meetings these teams must cover is staggering.
Table 1A: Stewardship Team Size and Proxy Voting Activity at the Big Three
| BlackRock | Vanguard | State Street Global Advisors (SSGA) | |
| Stewardship Personnel | Over 60 professionals (2024) | Over 60 professionals (2023) |
~40 (estimated, 2024) |
| Stewardship Personnel in 2019 | 45 | 21 | 12 |
| Proposals Voted | 167,973 (2024) | 182,241 (2024) | Over 214,000 (2024) |
| Engagements Held | 3,384 (2024) | 1,931 (2024) | Over 1,300 |
| Meetings & Companies Voted | 18,375 Meetings | 13,938 (2024) Meetings |
13,433 (2024) Companies; Over 24,000 meetings voted |
Table 1B: Stewardship Activity per Professional at the Big Three
| Firm | Proposals per capita | Engagements per capita | Meetings per capita |
| BlackRock | ~2,800 | ~56 | ~306 |
| Vanguard | ~3,037 | ~32 | ~350 |
| SSGA | ~5,350+ | ~33+ | ~600+ |
These structural splits are not merely administrative; they signal the end of a unified stewardship voice. The structural split is in parallel with the expansion of the “pass-through voting” programs. These programs allow investors to select from a menu of voting policies or vote their shares directly, theoretically unbundling voting authority from the asset manager.
However, the reality of adoption lags far behind the availability. While these programs cover trillions of dollars in assets, actual participation rates are surprisingly low, as detailed in Table 2.
Table 2: Adoption of Pass-Through Proxy Voting by Investors in the Big Three
| Asset Manager | Total Index Equity AUM | Eligible Equity AUM | Participating AUM / Opt Ins | Approximate Uptake Rate |
| BlackRock | $7.4 trillion | ≈ $3.65 trillion (institutional index equity) | ≈ $812 billion committed | ≈ 22% of eligible AUM |
| The Vanguard Group | ≈ $3.3 trillion eligible | ≈ $9 billion participating; ≈ 82,000 investors | < 1% of eligible AUM | |
| State Street Global Advisors | ≈ $1.9 trillion eligible (>80% index equity assets) | ≈ 12% of eligible institutional AUM | ≈ 12% (institutional) |
Finally, rule fragmentation is reshaping the advisory landscape. Recognizing that investors no longer share a single definition of value, proxy advisers are abandoning the “one-size-fits-all” model. In addition to Glass Lewis, ISS has similarly shifted E&S policies from presumptive support to case-by-case analysis and suspended DEI metrics for board composition at U.S. companies. The Big Three’s split stewardship teams adopt distinct voting policies consistent with their respective mandates. Meanwhile, with the advent of pass-through voting, multiple third-party guidelines and investor-customized guidelines are simultaneously available for selection.
The Consequences of Fragmentation
While the shift toward personalized stewardship promises greater investor autonomy, it carries significant risks for the efficacy of corporate oversight.
- Weakened Monitoring and Management Entrenchment The fragmentation of voting power benefits corporate management. When shareholders speak with a unified voice, they can effectively check managers’ self-interest. A fragmented shareholder base, governed by disparate voting policies and split stewardship teams, faces higher coordination costs. In the 2024-2025 proxy season, BlackRock supported 98.72% of director reelection proposals at S&P 500 companies, while Vanguard supported 99.3%. As stewardship fragments further, asset managers’ tendency toward over-deference to corporate management may be reinforced. As voting authority disperses through “voting choice” programs, the collective action problems that plagued widely held corporations in the past are returning, potentially insulating management from accountability.
- The Information Gap and Retail Disadvantage The retreat of proxy advisers from standardized benchmarks fundamentally alters their role as informational intermediaries. In a fragmented system, deep-pocketed institutional investors are able to invest in in-house analysis, dedicated stewardship teams, and direct engagement with portfolio companies. Retail investors and smaller funds cannot. This deepens the power asymmetry in the market. Retail investors, who already face significant difficulty in getting information and price discrimination in index funds, are ill-equipped to navigate a menu of complex voting policies.
Professor Jill Fisch has argued that pass-through voting is largely impractical for retail shareholders because of their lack of information. This assessment is reinforced by the evidence presented in Table 2. If information access facing retail investors cannot be meaningfully increased, retail investors may instead be subject to price discrimination through higher fees. In that setting, retail investors’ ability to rely on fund managers to exercise informed voting on their behalf is impeded.
A Path Forward
To preserve effective corporate governance in this fragmented era, we need targeted legal and policy reforms.
Empowering Retail Investors If institutional stewardship is fracturing, we must strengthen the counterweight: the retail investor. Barriers to voting? are too high. A promising development occurred in 2025 when the SEC staff issued a no-action letter permitting Exxon Mobil to allow retail shareholders to submit standing voting instructions (SVIs). This mechanism allows retail investors to set a default voting preference aligned with board recommendations across meetings, thereby substantially reducing the costs of voting. Regulators should formalize and expand the availability of SVIs. In addition, brokerage firms should be required to upgrade their voting infrastructure to match the professional platforms used by institutional investors, thereby reducing the voting costs borne by retail shareholders.
Disciplining Proxy Advisers As proxy advisers adopt case-by-case frameworks and embrace multiple perspectives, the risk of analytical error and conflicts of interest increases. Recent state investigations and the 2025 federal executive order (EO 14366: Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors) underscore serious concerns about the opacity of advisory methodologies. Rather than prohibiting proxy advisers from considering ESG factors, regulators should insist on methodological rigor. Advisers must disclose material conflicts of interest, particularly when they provide consulting services to the same companies on which they issue voting recommendations. In addition, advisers should disclose the analytical models that generate these perspective-based recommendations to ensure that they do not operate as black boxes.
Fiduciary Accountability for the Big Three Asset managers should ensure that voting choice and pass-through programs do not dilute their fiduciary duties. Mirror voting and similar proposals, while preserving the passive character of index funds, fail to reflect heterogeneous investor preferences and attract minimal participation. Given low investor participation in pass-through voting, asset managers must continue to exercise informed voting judgment on behalf of non-participating investors. Voting choice mechanisms may supplement, but cannot substitute for, asset managers’ fiduciary responsibilities.
Conclusion
The era of unified stewardship offered a stable organizing framework for corporate governance. A small number of dominant asset managers, operating through unified stewardship teams, enforced a rough consensus that largely tracked proxy adviser recommendations. That model has fractured under the pressures of political fluctuations and increasingly divergent investor preferences. Corporate governance is now entering an era of fragmentation. Although this shift more accurately reflects investor heterogeneity, it also risks weakening the mechanisms that constrain management power. By lowering voting barriers for retail investors and imposing robust transparency requirements on governance intermediaries, regulators can ensure that fragmentation does not erode shareholder democracy.
Chen Wang is a JSD at the University of California, Berkeley – School of Law and research fellow at the Center for Digital Economy and Legal Innovation at the University of International Business and Economics (UIBE). This post is based on his recent article, “The End of Unified Stewardship and the Rise of Fragmented Governance,” available here.