A "striking" report published Monday by the U.K.-based charity ShareAction exposes how the largest U.S. asset managers are "overwhelmingly" stalling corporate efforts to tackle the climate crisis despite those companies' public proclamations and the growing demands for bold action from people around the world.
No major surprise here. But still blows my mind that the many asset OWNERS represented are STILL okay with managers intentionally making them money from extreme #ClimateBreakdown? Its so cruel its almost inhuman. https://t.co/SHANbRgLkx #AGM #ESG #ClimateCrisis https://t.co/dh5oy7pDH6
— Charlene Cranny (@UKSIFCharlene) November 4, 2019
ShareAction promotes "responsible investment." According to the new report (pdf), the group's "vision is a world where ordinary savers and institutional investors work together to ensure our communities and environment are safe and sustainable for all."
As the report—entitled Voting Matters: Are Asset Managers Using Their Proxy Votes for Climate Action?—explains:
Investors have a key role to play in helping avert dangerous climate change. One way they can do so is by using their proxy voting rights. Proxy voting is the primary means by which shareholders can exert influence over their investee companies and exert stewardship... Yet, this stewardship tool is often underused by investors. This year, the directors of BP, Chevron, ExxonMobil, Shell, and Total were all (re-)elected with on average 97% support from shareholders, despite these companies being some of the largest emitting companies on earth and lacking plans to transition to a well-below 2°C world.
Voting Matters analyzes how 57 of the world's largest asset managers have voted on 65 recent shareholder resolutions that covered topics including "climate-related disclosures, companies' lobbying activities, and the setting of targets aligned with the goals of the Paris Climate Agreement."
ShareAction researchers found that "U.S. asset managers are clear laggards in terms of proxy voting on climate, whilst European asset managers lead the way." The top 10 worst performers overall are based in the United States; even the report's highest ranked U.S. managers score lower than those in Europe and the rest of the world.
"These results are highly concerning," Voting Matters says, "as the 20 largest U.S. fund managers control about 35% of global assets under management (AUM), more than double the 14% run by the top 20 European players."
The worst performers overall are Capital Group, T. Rowe Price, Blackrock and J.P. Morgan—which are tied for third—Vanguard Asset Management, Fidelity Management and Research Co., Wellington Management International, Franklin Templeton, Northern Trust, State Street Global Advisors, and MetLife Investment Management.
"Six out of 10 of the worst performers have come out in support of the Taskforce for Climate-related Financial Disclosures (TCFD) and joined at least one investor engagement initiative on climate change," the report notes, "yet fail to vote in favor of resolutions on climate-related disclosures."
The report's author, ShareAction campaign manager Jeanne Martin, said in a statement Monday that "you can't boast climate-awareness in public and block climate goals in private."
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"Ultimately, these investors will be judged on their voting, which is the most powerful tool at their disposal," Martin added. "They have the power to put the brakes on the climate emergency, but they're on auto-pilot, driving us head-on into it. We hope their clients take note of these findings which separate out those who are really walking the walk on climate change."
Martin, in a series of tweets Monday, outlined some of the report's key findings, including how fund managers are responding to the more than 50 investor initiatives that aim to compel and support investor activity on the climate crisis, such as the Climate Action 100+ (CA100+) Initiative, a global coalition that pushes some of the world's highest emitting companies to pursue climate action.
Now the same must be done with #resolutions on target-setting & transition planning.
— Jeanne Martin (@JeanneMartin25) November 4, 2019
Highlighting ShareAction's recommendations for asset owners, Martin concluded that "as stewards of capital for millions of beneficiaries, asset owners have a duty to monitor the engagement activities and proxy voting records of their asset managers."
There's a big job still to do convincing & mobilising asset owners to deploy capital like #ClimateBreakdown matters. Foundations, university endowments, pensions etc need to do more on asset manager standards #ESG #climaterisk @ShareAction https://t.co/L4pVwTxJbz pic.twitter.com/rEDAjEcCKX
— Colin Baines (@ColinBaines1) November 4, 2019
The report notes that "the last few years have seen a shift in investors' attitudes towards climate change." For example, "1,118 institutions representing US$11.48 trillion in assets and more than 58,000 individual representing US$5.2 billion have committed to divest from fossil fuels."
For those figures, Voting Matters cites Fossil Free, a project of the global environmental group 350.org. DivestInvest and 350.org detailed the divestment movement's successes in September with a report—released just ahead of the Financing the Future summit in Cape Town—that celebrated surpassing the $11 trillion milestone.
"What began as a moral call to action by students is now a mainstream financial response to growing climate risk to portfolios, the people, and the planet," the September report said. "The momentum has been driven by a people-powered grassroots movement, ordinary people on every continent pushing their local institutions to take a stand against the fossil fuel industry and for a world powered by 100 percent renewable energy."