2026 Australia Proxy Season Preview

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• Audit oversight has increasingly come under the spotlight. This was catalysed by the KPMG scandal involving alleged misuse of confidential client material in audit tenders in early 2026, and the issue is still under development. Australia has no annual shareholder vote on the audit firm, so the practical pathway for shareholders to demand board accountability is the election of the directors who oversee audit. Preliminary results from the ISS STOXX 2026 Annual Global Policy Benchmark Survey suggest that most respondents prefer to hold audit committee members at the issuer level – or other directors responsible for audit oversight – accountable, through director elections. Rather than supporting automatic sanctions against audit firms, respondents have placed greater emphasis on how issuers address audit-related concerns. Investors weigh the severity and nature of findings or sanctions, whether restrictions remain in force and evidence of robust audit committee or board review more heavily than mechanical indicators (such as the lapsing of a sanction, audit-partner changes or the duration of the audit relationship).
• The governance framework is being rewritten, but not in time to shift the narratives for this season. On 21 July 2026, ASX opened an eight-week consultation on a draft fifth edition of the Corporate Governance Principles and Recommendations. The eight principles and the ‘if not, why not’ approach are retained, with reduced prescription. The fourth edition still governs the 2026 and 2027 seasons, as the draft applies only to financial years beginning on or after 1 July 2027.
• Executive remuneration remains a focus in Australia. Remuneration dissent eased in 2025, but the number of strikes is still above the 2018–2022 range for ASX 300. A prior strike remains a strong leading indicator of the likelihood of another strike, whereas a ‘clean year’ has been a reliable signal that the matter was fixed rather than deferred. Spill resolutions continued to fail following ‘two strikes’. Escalation moved instead to director elections, and most often to remuneration committee chairs. Where pay concerns stayed unresolved, director dissent at these issuers ran well above that at issuers where problematic pay practices had been addressed by the board.
• Several boards changed before shareholders reached the ballot. Chairs, chief executives and committee composition have shifted at issuers which faced heavy opposition after the 2025 season or in recent months.
• AASB S2 shifts scrutiny of climate transition plans towards mandatory disclosure. Large Group 1 entities’ first climate statements are due at the FY26 year-end. The requirement was extended to Group 2 entities starting from 1 July 2026. This marks a shift from voluntary stewardship preference to formal compliance assessment across a broader issuer base. Meanwhile, management-sponsored say-on-climate votes may see a cyclical low-volume year in 2026 based on the voluntary triennial cadence.
• Among shareholder proposals, support appears to be gathering, albeit not decisively. Thematic proposals rarely passed. Board contests and director nominations dominated shareholder proposals captured from 2020 to 2025, and passed at roughly 23 percent. Climate and transition proposals had a pass rate of 3.8 percent and support rate of 24.0 percent.

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