ESG at Stock Transfer Agents

Since ESG has been an issue in business for years now, and should grow in importance even while it evolves, we thought we should share some thoughts on how U.S. stock transfer agents (TAs) seem to be addressing it.


By and large, TAs leave a minimal carbon footprint relative to the broad reach and importance of their functionality.  They are heavy users of technology, with more and more of their work being taken out of the hands of human beings.  Stock certificates are going the way of the dinosaur, making book-entry evidence of stock ownership standard procedure.  Shareholder and issuer self-service using the internet is replacing telephone calls and letters to communications center staff – no longer requiring as many brick and mortar facilities.  Annual shareholder meetings are happening “virtually” to a great extent, facilitated at TAs by application programming interfaces (APIs) established with Broadridge.  More work by TA employees is happening “remotely,” cutting down on carbon emissions from commuting and the use of large commercial office spaces.  Ironically, and happily, TAs’ profitability is naturally enhanced by its adherence to good green practices, so there is only favorable news as we see it on this front.


From our perspective TAs also have generally good relations with their employees, after periods in the past when this was not always the case.  No TA we know of has unionized employees in the U.S., nor is there evidence a move in this direction is likely, which is a positive social statement in and of itself.  TAs’ workforces are highly diversified in all respects, including as it relates to ethnicity and gender, perhaps due to the fact that TA work covers the full spectrum of complexity and pay scales – and, enhanced by the remote work phenomenon, takes place in a variety of geographical locations.  Moreover, neither of the two major public company TAs had complaining shareholder proposals at their last annual meeting, signaling no apparent ESG issues among investors.  So, there are no shortcomings in how TAs handle the social “leg of the stool” that we are aware of.


If one now calls EQ and AST a single TA under its one owner (Siris Capital Group), thus representing one of the four largest TAs in the U.S. along with Computershare, Broadridge and Continental Stock Transfer, then half the Big Four are private companies and half are public (NYSE: BR and ASX: CPU).  And in a scenario well-received by most industry observers, the latter two public company TAs, Broadridge and Computershare, are managed at the customer-facing level by women.  Moreover, if one were to consider Securitize/Pacific Stock Transfer and ClearTrust as the number five and six largest TAs in the U.S., the latter is run by a woman as well.  Generally speaking, TAs’ leadership and board members seem well-respected – again, historically not always the case.  With the huge contraction in number of TAs that are still in the business after 30+ years of mergers and straight-forward exits from the industry, a natural selection process (“cherry-picking”) has occurred, making TAs’ management and staff perhaps the best they have ever been.  And they will have to be, as they deal with arguably the most dangerous governance challenge going forward, cyber-security, an existential threat to virtually every TA.

Bottom line:  U.S. transfer agents seem to be doing a good job in the area of ESG, again largely due to their self-serving strategy of using technology to streamline operations and pass more work onto customers – not meant as a criticism, but rather as a tip of the hat to good business sense, as long as customer service remains satisfactory.