When it comes to environmental, social and governance (ESG) commitments, asset managers occasionally find themselves in the firing line.
But the latest criticism from campaigner Share Action accuses larger firms of turning their back on their ESG commitments following their worst voting performance yet.
Research from the responsible investment pressure group found that in 2023 only 3% of assessed resolutions were passed, down from 21% in 2021.
Of the environmental resolutions assessed, just 3% passed last year compared to 32% in 2021. On social resolutions, a drop in majority support from 15% to 4% over the period was revealed.
Furthermore, many asset managers are risking accusations of greenwashing by not supporting crucial climate resolutions despite having net-zero pledges, Share Action said.
The group noted that asset managers who have signed up to Climate Action 100+ with a mandate to protect the environment “are at the same time voting down resolutions at AGMs that would improve environmental protections in what can only be described as greenwashing”.
Claudia Gray, head of financial sector research at Share Action, said this is the worst result she has seen from asset managers in recent years. “This lack of support for key shareholder resolutions in 2023 is deeply concerning,” she added.
“It is even more worrying that some of the world’s largest asset managers are failing to support climate resolutions despite their public commitments to reduce carbon emissions,” Gray said.
For asset managers to have any credibility here “they need to vote in favour of more social and environmental resolutions”, she said, but added that the opposite is happening.
Ranking 69 of the world’s largest asset managers, Share Action’s research assessed how they voted at AGMs during 2023, and for the first time makes a comparison with the policies and public statements of the asset managers.
Geographic differences
The research also uncovered a distinction between the way European and North American asset managers voted in 2023. Asset managers in European have a much better record of voting for resolutions that are designed to protect the environment and human/employee rights, than their US counterparts.
Share Action revealed the trend toward more responsible voting practices among European asset managers continues unabated.
On average, they supported 88% of shareholder proposals on environmental and social issues, signalling a positive trajectory across European countries.
In the UK, support hovers at around 64% on average, while US asset managers typically only voted for 25%.
The research highlights that Blackrock, Fidelity, Vanguard and State Street, known as the ‘big four’ asset managers as they are the largest in the world, “have a massive influence on the companies they invest in”.
Yet average support amongst the big four for environmental resolutions fell from 39% to 14% between 2021 and 2023, according to Share Action.
Support for social resolutions went down to 13% from 29%.
A resolution at Amazon calling for an assessment of its workers’ union rights would have passed had the big four voted in favour, along with 68 other key resolutions, said the responsible investment pressure group.
Share Action also suggested that dozens of resolutions would have passed if these managers had voted for them, including at Amazon, Apple, Coca-Cola, chemical giant Dow, Pfizer and Lockheed Martin.
Long-term return
Share Action said the world’s largest manager, Blackrock, supported just 8% of resolutions.
But in response, a spokesperson for Blackrock told portfolio institutional: “As a minority shareholder on behalf of our clients, our role is to better understand how company leadership is managing risks and capitalising on opportunities to deliver long-term financial returns. We analyse each resolution on a case-by-case basis and vote, where authorised, to advance our clients’ long-term financial interests.”
The spokesperson also gave context to why the asset manager had voted as it did. “In 2023, because so many proposals were over-reaching, lacking economic merit, or simply redundant, they were unlikely to help promote long-term shareholder value and received less support from shareholders, including Blackrock, than in years past.”
A spokesperson for State Street also explained its voting approach to portfolio institutional: “At State Street Global Advisors, we have maintained a consistent voting record on environmental, social and governance shareholder proposals.
“We support proposals we think make sense for a company while not being overly prescriptive or dictating how management runs a company. This approach is the best way to build long-term shareholder value for our investors.”
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