More than twice as many shareholder ESG resolutions would have passed the 50% support threshold if the three largest U.S. asset managers had backed them this past proxy season, according to a report from responsible investing organization ShareAction released Tuesday.
ShareAction analyzed 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. Of those 102 resolutions, 15 passed the 50% threshold this proxy season, but an additional 17 would have passed with the support of one or more of what ShareAction called the Big Three — BlackRock, Vanguard Group and State Street Global Advisors.
While the 17 strongest resolution supporters are based in Europe and were smaller firms like Impax Asset Management, Aviva Investors and PGGM Investments, ShareAction found that some U.S. asset managers improved when it comes to backing shareholder resolutions.
J.P. Morgan Investment Management supported 51% of climate resolutions compared to 7% in the previous proxy season; Wellington Management International voted for 62%, up from 10%; and Northern Trust Asset Management supported 79%, up from 21% from the previous year.
By contrast, BlackRock supported 12% and Vanguard supported 14%. State Street voted against 11 of the 17 resolutions that did not garner 50%.
“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,” ShareAction CEO Catherine Howarth said in a statement.
The report noted that many asset managers that did not support resolutions said they preferred to engage privately, or argued that the company was doing more than its peers. Jeanne Martin, senior manager at ShareAction and the report’s co-author, said in a statement that while private engagement is important, “its effectiveness to enact change can be limited. Given the scale of the climate crisis, it is concerning that some investors shy away from voting on critical resolutions at high carbon companies on the basis of engaging with them privately.”
A State Street statement said: “We are committed to engaging actively with companies to help them improve their working practices related to numerous ESG criteria, including on human rights issues. We are working to implement enhanced screening protocols in line with UN global compact principles.”
Vanguard in a separate statement said its approach to environmental and social matters is continually evolving, and that each shareholder proposal is evaluated based on relevance to the company involved and if it protects long-term investor interests.
“Proxy voting is one important component of our approach," Vanguard said. "Not all shareholder proposals are created equal, and a result, a high-level analysis of our voting record does not accurately reflect the full extent of our actions with companies on the material risks associated with climate change and other environmental or social issues. ... In addition to proxy voting, we regularly engage with company leaders and boards on ESG issues as we’re acutely aware such matters can have a significant impact on long-term shareholder value.”
In its statement, BlackRock said that it engaged more than 2,000 companies last proxy season and voted against more than 5,100 directors when expectations were not met.
“We expect companies to manage and disclose sustainability risks, and to that end we leverage the widest range of stewardship tools on behalf of our clients," BlackRock said. "We will support shareholder proposals that address necessary action on business-relevant sustainability issues consistent with delivering long-term value."
