How asset managers vote on corporate resolutions every year determines the future of our planet, but the world’s very biggest investment corporations continue to block progress on environmental and social issues.
Researchers from non-profit organisation Share Action, in the latest edition of the Voting Matters report released this week, outlined how 68 of the world’s largest asset managers voted on 252 ESG-related shareholder resolutions.
Less support for ESG resolutions
The researchers found that the world’s largest asset managers supported fewer shareholder resolutions on environmental and social issues in 2022 than in 2021.
Much of the observed drop in support occurred in the energy sector. According to Share Action, this can be explained by “reluctance to attack energy companies in the face of record profits following the war in Ukraine, leading to larger dividends and buybacks for shareholders”.
Interestingly, the researchers find that BlackRock supported 72 per cent of environmental resolutions at energy companies in 2021 compared to only 16 per cent in 2022. This reduction is much larger than the change in their average support for environmental resolutions in all other sectors, which fell by a relatively small 10 percentage points, from 43 per cent in 2022 to 33 per cent in 2021.
“Our assessment shows that the voting behaviour of large asset managers is inconsistent with their public climate pledges. Moreover, the voting behaviour of these managers is inconsistent with the public climate promises of many pension fund clients, which will be of concern to participants in these pension schemes,” the researchers wrote.
Some 49 additional resolutions would have received a majority had the largest asset managers, BlackRock, Vanguard, and State Street Global Advisors, voted in favour of them. All voted more consistently conservative in 2022 than their proxy voting advisers, such as ISS and Glass Lewis, had recommended.
Asset managers hesitant
Further, it appears that asset managers across the board are hesitant to support action-oriented resolutions, “even though they have the most transformative impact on environmental and social issues,” the report said. According to the researchers, this raises the question of whether asset managers are really taking responsibility for addressing these important social issues.
“The asset management industry is critical to addressing issues such as droughts, impoverished biodiversity and inflation on a large scale. How asset managers vote on corporate resolutions every year determines the future of our planet,” the report said.
While most European asset managers showed more support for ESG resolutions, their US and UK peers lagged behind. Interestingly, Dutch parties performed well compared to US and UK asset managers. As many as four Dutch providers made it into the top 10. Achmea Investment Management even tops the list.
Despite the fact that the straggler of the list is a British party, asset managers from the US are overrepresented in the bottom of the ranking. “The Big Three” - BlackRock, Vanguard, and State Street Global Advisors - are all among the bottom eight.
Efforts are being made to tighten US financial legislation and align it with developments in Europe, but despite this, wide disparities remain. Importantly, according to the researchers, there are still no mandatory ESG reporting requirements in the US.
Taking responsibility
ShareAction is a non-profit dedicated to developing a global investment industry that takes responsibility for the impact of policies on people and the environment. Its focus includes improving working conditions worldwide, addressing the climate crisis and combating health problems such as childhood obesity. ShareAction has been active for 15 years.