Large money managers have failed to push their investee companies to accelerate the transition to a low-carbon economy, according to a study of engagement strategies by U.K.-based think tank InfluenceMap published Wednesday.
The report found that only Allianz, Legal & General Investment Management and UBS Asset Management, out of the 15 money managers studied that collectively have $37 trillion in assets under management, strongly and consistently engage with the companies to align their business models with the United Nations' Sustainable Development Goals.
While the rest of the firms all call on companies to consider climate risks, InfluenceMap found that these firms do not lobby for a change in policy to address climate change.
Among the criticized money managers were State Street Global Advisors and BlackRock. Responding to the criticism from the think tank, a spokesman for State Street Global Advisors said in an emailed comment Wednesday: “As an index investor, SSGA tracks the indexes of global data providers, which means that we are compelled to buy and sell holdings according to an index’s composition. While we are unable to sell holdings of companies where we disagree with management, we always use our votes as shareholders who actively implement policies to promote environmental, social and governance responsibility.”
A BlackRock spokesman responded in a separate emailed comment: “It would be an error to judge an asset manager’s stewardship by its voting alone. BlackRock ... engaged 370 companies globally on the topic of climate risk in the past two years, more than five times the number of climate-related shareholder proposals that came to a vote over the same period.”
“As the numbers demonstrate, we put a priority on engaging with a company on addressing climate-related issues even in the absence of shareholder proposals. At the same time, we provide product choices to clients who wish to avoid specific sectors through our sustainable investing platform and invest heavily in research demonstrating the relationship between sustainability issues, risk and long-term value creation,” the spokesman added.
According to the study, Fidelity Investments and Capital Group scored the lowest because they have engaged with their portfolio companies on climate in a limited way. A Capital Group spokeswoman responded to the criticism in an email Wednesday. “Climate is an important issue, which is why we regularly engage with boards and management as part of our analysis of companies, and we closely consider client-related shareholder resolutions. Last year alone, we conducted thousands of face-to-face meetings with companies, their suppliers, customers and regulators, to understand their businesses — including how they approach ESG issues.”
Fidelity spokesmen did not respond to requests for comment.
"If global money managers wish to support the Paris Agreement and remain invested in the automotive, power and fossil-fuel industries, then they must engage robustly with companies in these sectors to accelerate their switch to low-carbon technologies and ensure their policy lobbying supports climate targets," said Thomas O'Neill, research director of InfluenceMap, in a news release.
The study also examined which money managers file the most climate resolutions and found that smaller firms of those studied — including Hermes Investment Management, Sarasin & Partners, Walden Asset Management, Trillium Asset Management, and Zevin Asset Management — among them filed 20% of all climate-related resolutions in 2018.
The study also found that equity portfolios of the 15 managers were misaligned with the 2015 Paris Agreement's target of keeping global temperature increases below 2 degrees Celsius, were overweight companies deploying brown technologies and underweight in those deploying green technologies in automotive, oil and gas, electric power and coal production sectors.
