How asset managers vote on climate: ShareAction’s Insights on Climate Resolutions
ShareAction's Voting Matters report unveils "deeply concerning" trends in asset management voting behaviour.
With proxy season 2024 underway, we highlight a report from leading responsible investment charity, ShareAction, which details how asset managers vote on climate. You can read the full take on the ShareAction website, here. If you are an asset owner who would like to learn more, read our Guide to Taking Action for Asset Owners.
ShareAction’s latest report, ‘Voting Matters’, unveils what Claudia Gray, Head of Financial Sector Research at ShareAction, calls “deeply concerning trends” in the voting behaviour of the world’s largest asset managers during 2023.
Focused on shareholder resolutions which address environmental and social concerns, the report highlights a significant departure from previous years. It signals a critical need for a renewed commitment to responsible investment practices as we continue into 2024’s AGM season. One key finding is the looming risk of greenwashing among asset managers with net-zero pledges; ShareAction urges asset managers to leverage their voting power effectively to drive positive change and uphold their commitments to responsible investment.
How do asset managers vote on climate?
In 2023, only 3% of the assessed resolutions received majority support, marking a drastic decline from the 21% seen in 2021. ShareAction see the decline in environmental resolutions — with only 3% passing compared to 32% in 2021 — as particularly alarming. Notable asset managers such as JP Morgan Asset Management, State Street Global Advisers, and Baillie Gifford drew criticism for voting against environmental protection resolutions, despite public commitments to achieving net-zero emissions. This contradiction has raised concerns about greenwashing within the industry.
Social resolutions also suffered a blow, with majority support dropping from 15% to 4% in 2023. Resolutions addressing critical issues like human rights risks in supply chains were rejected, largely due to opposition from major asset managers like BlackRock, Vanguard, Fidelity Investments, and State Street. Gray expressed deep concern over this “unprecedented” retreat from environmental and social responsibilities. She emphasised the pivotal role of asset managers in addressing urgent climate, biodiversity, and social challenges.
In total, the report evaluates how asset managers vote on climate at 69 of the world’s largest firms, drawing comparisons with their policies and public statements. It reveals a notable disparity between European and North American asset managers, with European firms demonstrating stronger support for resolutions safeguarding the environment as well as human and employee rights. It also underscores a positive trend among European asset managers towards more responsible voting practices, with an average support rate of 88% for shareholder proposals on environmental and social issues. In contrast, US asset managers displayed lower average support, voting for only 25% of such proposals.
Critically, the report sounds the alarm on the declining support of climate voting from the ‘big four’ asset managers – BlackRock, Fidelity Investments, Vanguard, and State Street. Their average support for environmental resolutions plummeted from 39% to 14% between 2021 and 2023, mirroring similar declines in support for social resolutions.
Gray calls for asset managers to realign their voting decisions with global goals such as tackling climate change and ending worker exploitation. Urgent action is needed to prevent further setbacks in reaching internationally agreed-upon targets by 2030.