New analysis from Ceres and FundVotes indicates robust growth in support for climate-related proposals among the largest institutional investors operating in the US.
During the 2018 proxy season, 46 percent of asset managers voted for more than half of climate-related shareholder proposals tracked by Ceres, up from roughly 33 percent in 2017. The shareholder proposals analyzed asked companies to take action by, for example, setting greenhouse gas reduction targets, disclosing climate-related risks on an annual basis and establishing mechanisms for rigorous board oversight of these risks.
‘Some asset managers have been aware of the profound financial and societal risks related to climate change for a number of years,’ Rob Berridge, director of shareholder engagement at Ceres, says in a recent post on the analysis. ‘One way they have demonstrated this awareness is through their proxy voting.’
For example, he notes that Deutsche Asset Management (now DWS) voted ‘for’ 97 percent of climate-related proposals it faced in 2018 and 100 percent in 2017. Pimco decided to vote in favor of every single climate-related proposal it faced in 2018, up from 49 percent in 2017, according to Ceres.
Other firms with high levels of support for climate change proposals include Allianz (which voted for 94 percent of them in 2018), AllianceBernstein (88 percent), Eaton Vance (85 percent), Guggenheim Investments (83 percent) and Nuveen (82 percent), according to the Ceres analysis.
‘One factor driving this trend is the fiduciary legal duty asset managers have to their clients to vote on shareholder proposals,’ Berridge says. ‘Managers are required to vote based on consideration of whether each proposal helps to protect the economic interests of their clients.
‘Climate change presents a rapidly growing set of economic risks for companies in nearly every sector, from oil and gas to utilities, insurers, manufacturers, retailers and beyond. The business risks fall into several categories: physical, transition, regulatory, reputational, competitive and legal among them.’
Berridge notes that a number of smaller asset managers also have very strong voting records but do not appear in the Ceres data due to its focus on the largest firms. ‘[Asset managers] can improve their voting on climate-related proposals by ensuring their proxy voting guidelines include language that encourages votes ‘for’ climate-related shareholder proposals that address important risks and opportunities for companies,’ he adds.
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Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
