Just 15 out of 102 shareholder resolutions on climate and social issues received majority support from asset managers in the past year, according to ShareAction, with Climate Action 100+ members’ support ranging from comprehensive to negligible.
Amongst signatories to Climate Action 100+, one of the most widely supported climate change coalition, Aegon Investment Management and Man Group supported 100 per cent of climate resolutions, in contrast with Credit Suisse Asset Management which backed 22 per cent, BlackRock which backed just 12 per cent, and Lyxor Asset Management which backed 2 per cent, according to the report published by ShareAction earlier this month.
ShareAction said this divergence should remind asset owner clients that membership of collaborative engagement groups such as Climate Action 100+ is no guarantee of commitment to responsible investment.
The findings echo conclusions of an earlier report by US pressure group Majority Action, which found BlackRock voted against 10 out of 12 shareholder proposals flagged by Climate Action 100+ in the months following it signing up to the coalition. Vanguard did not support any of them.
The Share Action report found no increase in support for human rights resolutions post-Covid-19, despite rhetoric of increased ESG attention on ‘S’ issues.
ShareAction identified a June 2020 resolution calling for US supermarket chain Kroger to report on its human rights due diligence process which narrowly failed, with 48 per cent support from shareholders. This was despite the US Department of Labor having identified dozens of products stocked by Kroger which were produced with child or forced labour. The resolution would have passed if any of the big three asset holders – BlackRock, State Street or Vanguard, had voted in favour, but all voted against.
ShareAction analysed the voting decisions of 60 of the world’s largest asset managers on 102 shareholder resolutions on climate change and social issues from September 2019 to August 2020.
Smaller European fund managers top the rankings, with the 17 best performers all based in Europe. Impax Asset Management, Aviva Investors and PGGM Investments all supported more than 95 per cent of the resolutions analysed.
Several US investors improved their scores: JP Morgan Investment Management supported 51 per cent of climate resolutions, up from 7 per cent in 2018/19, Wellington Management International voted for 62 per cent, up from 10 per cent while Northern Trust Investments supported 79 per cent, up from 21 per cent last year. Vanguard voted for just 14 per cent of the resolutions.
ShareAction chief executive Catherine Howarth says: “As responsible investment strategies surge in popularity, voting on shareholder resolutions is a key test of authenticity and commitment. We applaud asset managers who voted with conviction in 2020’s proxy season on social and environmental resolutions. Pension fund clients of asset managers exposed as having a weak voting record must urgently challenge the gap between rhetoric and action on behalf of their beneficiaries.”
A BlackRock spokesperson: “BlackRock Investment Stewardship focuses on advocating for corporate governance and business practices that add value to our clients’ investments – that means both engagement and voting.
“This year, our focus on climate was through engagement and holding directors accountable. In 2020, we identified 244 companies making insufficient progress integrating climate risk into their business models or disclosures. Of these companies, we took voting action against 53, or 22%. We have put the remaining 191 companies ‘on watch.’ Those that do not make significant progress risk voting action against management in 2021.
“More broadly, we continue to leverage stewardship tools to address ESG risks for our clients’ investments. We have transformed our own disclosures as a stewardship team, publishing more vote bulletins than ever before. Our quarterly, annual, and topical reports also provide greater transparency as to how we are delivering on our commitment to drive enhanced climate risk reporting.
“We have increased our votes against directors, underscoring our sustained focus on director accountability globally. And, we have one of – if not the largest – global stewardship teams in the industry, reflecting BlackRock’s commitment to making informed voting decisions and providing constructive feedback through continuous engagement that supports long-term value creation.”
A spokesperson for Vanguard says: “Vanguard cares deeply about the long-term impact of climate change and we continue to engage with company leaders and boards on this important issue. Proxy voting and our voting record, while important, does not reflect the full extent of our actions with companies on the material risks associated with climate change and other environmental or social issues.
“Through our engagements, we have been encouraged by the progress and steps companies have taken to address issues where material risk is present.
“For example, this year we saw visible progress on commitments and climate-related disclosures at Santos Limited and Woodside Petroleum. Santos, for example, embraced carbon capture technology and aligned its reporting with the TCFD framework. Both companies have also committed to being carbon-neutral by 2050. Based on that visible progress, we did not support the shareholder proposals at either company. If a company does not make progress towards addressing such risks, we will hold them accountable.”
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