The landscape of corporate governance is undergoing a profound transformation, driven by technological advances and the rising influence of a more diverse investor base. Moving beyond a transactional and compliance-driven approach to shareholder relations and proxy voting, inclusive engagement has become a strategic cornerstone of effective corporate governance.

It is no surprise that, as the 2025 AGM season unfolds, companies are grappling with widening divisions between shareholders and boards on issues ranging from diversity, equity and inclusion (DEI) to environmental, social and governance (ESG) matters to the role of Big Tech in society.

Boards and executive teams must now navigate a more democratised capital market, where traditional institutional power is increasingly complemented by the collective voice of retail investors. Understanding and adapting to this evolving dynamic is not merely a matter of compliance, but a strategic imperative for a company’s long-term success and stability. This is why transparent communication between companies and their shareholders is vital.

The rise of the retail investor

Technology has fundamentally reshaped how individuals access and participate in financial markets. The use of user-friendly trading apps and online platforms has driven a marked democratisation of capital markets, making investing more accessible than ever before. This has fuelled a dramatic surge in retail investor participation, particularly among those in the younger, digitally native demographic, who are keen to engage with companies whose values align with their own.

But this shift signifies more than just growing numbers. Retail investors are no longer passive owners: they are informed, vocal and demand a meaningful say on critical issues such as ESG, executive pay and corporate strategy. Their collective power, which is amplified through social media and digital forums, can materially affect share prices and proxy outcomes.

Companies that ignore this growing constituency miss opportunities to cultivate a loyal and supportive shareholder base. Digital platforms can play an essential role in ensuring this broader base of investors can effectively engage with the companies in which they invest.

Boosting inclusivity

For companies, proactive engagement fosters transparency and builds trust, both of which are invaluable in today’s scrutinised corporate environment. By having a clear platform for shareholder feedback, boards can gain richer insights, leading to more informed decisions and stronger strategic alignment. This two-way communication not only enhances a company’s reputation but can also contribute to higher share prices and a lower cost of capital, reflecting increased investor confidence and reduced perceived risk.

Such platforms play a vital role in providing real-time data and streamlined communication for crucial transparency. Investors, in turn, gain greater clarity on company strategy, performance and governance practices, which empowers them to make informed investment and voting decisions. When investors feel heard and valued, their loyalty and support for management and board initiatives tend to increase, creating a more stable and constructive ownership base.

A year-round strategy

Designing successful shareholder engagement programmes requires a thoughtful, year-round strategy that goes well beyond the annual general meeting (AGM). Regular updates, investor days, and direct outreach throughout the year help maintain ongoing communication and build stronger relationships.

Recognising the diverse needs of different investor types is key. While institutional investors may favour detailed financial briefings, retail investors often prefer accessible digital content, webinars, or social media engagement. A survey by NIRI, the association for investor relations, reports that 60% of investors are dissatisfied with traditional forms of communication, while 75% prefer digital updates.

This shift is driving companies to adopt solutions that can provide real-time visibility into ownership structures and voting trends.

Data analytics can further help identify key investor segments and their concerns, allowing for more targeted outreach. Clear, concise, and easily accessible disclosures are fundamental, whether that be financial, ESG-related, or governance-focused. Companies should also establish transparent feedback channels, whether through investor surveys, dedicated email addresses, or interactive Q&A sessions during virtual events.

Bridging the activist divide

One of today’s biggest corporate governance challenges is the persistent disengagement of many retail investors. A significant segment of retail investors hold meaningful voting power but remain inactive in proxy votes or broader governance dialogues. This disengagement creates vulnerabilities, leaving companies exposed to activist campaigns that may not reflect the broader shareholder base’s long-term interests.

The traditional proxy voting chain, which is historically plagued by opacity, delays, and fragmented data, has only worsened this problem. That’s why it’s important to close the gap, and enable timely and accurate information flow between issuers and investors.

The numbers illustrate the growing assertiveness of shareholders. According to Lazard’s 2024 Shareholder Activism Review, in 2024, shareholder activism surged to levels not seen since 2018, with 243 campaigns launched globally. The first quarter of 2025 continued to show this trend, with 70 campaigns already underway, according to a report from Barclays Capital. The US remains a hotspot, recording a 43% year-on-year increase with 40 campaigns in Q1 2025. Meanwhile, the UK has seen activist campaigns more than double in early 2025 compared to the same period in 2024.

Recent high-profile examples include Elliott Investment Management securing two board seats at Phillips 66 and Mantle Ridge LP winning a campaign at Air Products and Chemicals, Inc. Meanwhile, Becton Dickinson, Honeywell and Solventum all announced corporate break-ups in Q1 2025 under activist pressure. In the UK, Saba Capital initiated a bid to control seven investment trusts, demonstrating ongoing activist focus on governance and accountability.

At the same time, overall support for shareholder resolutions has dropped to historic lows. ShareAction found that global average support fell from around 40% in 2021 to just 20.6% in 2024 . However, a Diligent review shows support remains high for specific governance reforms: proposals to replace supermajority voting with simple majorities averaged 75% support across 40 resolutions in 2024. Similarly, calls for equal shareholder voting rights continue to gain traction. For example, at Tyson Foods’ February 2024 shareholder meeting, 56% of non-insider shareholders supported a resolution for greater vote transparency by share class.

Passive shareholder relations are not enough. In 2025, companies need to deliberately implement proactive, technology-driven engagement strategies that recognise the growing power and evolving expectations of all investors. By leveraging digital platforms that enhance real-time communication and transparency, boards can build deeper trust, gain valuable strategic insights, and secure sustainable long-term value.

The stakes may be high, but so are the opportunities for those willing to lead in this new era of corporate governance.

Jonathan Smalley is COO and co-founder of Proxymity, a digital investor communications platform