ESG Investing Conference

Impact Investing Conference

ESG Investing

The World’s Largest Asset Managers Fail to Back Climate-Action Resolutions MarketWatchThe World’s Largest Asset Managers Fail to Back Climate-Action Resolutions MarketWatchThe World’s Largest Asset Managers Fail to Back Climate-Action Resolutions MarketWatch

Impact Investing Conference

Impact Investing Forum 2022

https://impactinvestingconferences.com/

London. April 28-29, 2022.

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Maitane Sardon. Many of the world’s most powerful money managers have committed to net-zero emissions by the middle of the century. They aren’t using the shareholder voting power to pressure companies whose stock is owned to act on climate change.

Fund managers representing $57 trillion in assets have signed up for the Net Zero Asset Managers Initiative. This initiative supports the United Nations goal to achieve net-zero emissions by 2050. ShareAction, a U.K.-based nonprofit that coordinates investor campaign and conducts ESG Research, stated that asset managers aren’t backing their net zero commitments with votes for shareholder resolutions aimed to shape companies’ climate policies. Asset managers instead use their votes to support climate-related and diversity disclosures. Shareholder resolutions, which are requests made by investors to management, are usually voted on at annual general meetings. They are not legally binding in the U.S. or Canada, but they can be used to push companies to make changes. ShareAction only analyzed 17 of 53 key environmental resolutions. Proposals for lobbying or disclosures of climate data received more support than those that focused on corporate strategy changes, such as reducing greenhouse gas emissions. According to the ShareAction report, one resolution that called for action failed to receive a majority support at 20% of votes. It asked that Australia’s AGL Energy forward the dates for the closure of two power stations in accordance with its climate analysis. It stated that asset managers offered a variety of reasons for voting against the resolution, including that it was too restrictive or that the idea of aligning to the target of limiting global temperature rise to 1.5 degrees Celsius was too prescriptive. ShareAction senior research analyst Felix Nagrawala said that the report shows investors believe lobbying disclosures are more in the shareholders’ interest than changes to corporate strategies related to climate change. ESG data is often used by investors to help them understand how companies manage risks and opportunities. Common reasons for opposing strategies-focused resolutions include concerns that resolutions will be too binding or that the company has already made some progress. “Given climate change’s severity, it is inappropriate that asset managers use companies’ progress as an excuse to oppose further action.” Mr. Nagrawala stated. He suggested that investors should support resolutions calling on companies to set targets in line with the Paris climate accord. Money managers have always pushed companies to reduce their emissions and take other steps to improve their environmental and social profile through what they call “engagement”. They meet with management, join investor groups, but rarely push for shareholder votes or sell their shares. The success of ESG proposals is dependent in many cases on the support of some the most powerful money managers in the world, BlackRock Inc. and Vanguard Group. State Street Corp., which have been criticised for having too much voting power. BlackRock stated last year that it would use its considerable power to pressure more companies to address ESG issues. The asset manager stated that it would be more likely to support shareholder proposals, given the urgent need to take action on many business-relevant sustainability topics. He also said that the company would not wait to evaluate the effectiveness of engagement. According to the report BlackRock voted to vote for 40% of resolutions in 2021, up from 12% last years. ShareAction stated that the industry appears to be stagnant. 51 asset managers who were assessed over the past two year have seen their votes increase by only 4%. 13 social resolutions calling for disclosure about information regarding workforce diversity received more shareholder votes than the rest of the 89. According to the ShareAction report, those aimed at changing corporate behavior failed to win more than 30% shareholder support. Write to Maitane Sardon at maitane.sardon@wsj.com

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ESG Investing Conference