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NEW YORK, NY, THURSDAY, DECEMBER 12, 2024 – A group of asset owners today announced that they had sent letters to their top asset managers questioning a marked drop in their support for shareholder proposals calling for increased accountability on corporate environmental, social, and governance (ESG) impacts.
The letters were sent to BlackRock ($BLK), Vanguard ($VTI), State Street ($STT), and T. Rowe Price ($Trow), four of the largest global fund managers, which collectively manage roughly $23.6T in assets representing nearly one-quarter of global capital markets.
The asset owners cite the contradictions created by dramatically declining proxy support for shareholder proposals by the asset managers despite public commitments to sustainability, particularly commitments to mitigate climate risk.
Said Tim Smith, Sr. Policy Advisor at the Interfaith Center on Corporate Responsibility, which coordinates investor engagements with asset managers on their proxy voting records, “Unfortunately, some asset managers have dramatically decreased their voting support for well-written and reasonable resolutions, including Vanguard, which failed to support even one environmental or social proposal during 2024 regardless of the clear financial risks they raised. In response, asset owners who are clients and shareholders of these investment managers have written them challenging this as an abdication of fiduciary duty.”
As an example, BlackRock’s own research indicates that the long-term implications of inaction on climate change could reduce global economic output by nearly 25 percent over the next two decades, making addressing climate change a material issue for fiduciaries. Yet despite this, BlackRock’s recently released 2024 Global Voting Spotlight reports that the firm “supported (only) four out of the 161 shareholder proposals on climate and natural capital that we voted on”. This stands in stark contrast to BlackRock’s 2022 record of supporting 37% of environmental proposals on corporate proxies.
At DexCom, BlackRock opposed a majority-supported 2024 shareholder proposal calling for political spending disclosure in an election year. This divergence with the majority of its fellow shareholders is one example of BlackRock’s misunderstanding of the material risks raised by shareholder proposals.
Said Katie McCloskey, Vice President of Social Responsibility, Mercy Investment Services, “BlackRock’s survey of institutional investors showed that its clients care deeply about proxy voting on sustainability: It emerged as the number one criterion for selecting managers by 20% of 200 institutional investors surveyed. The company needs to rectify its poor sustainability-related proxy voting record with what institutional investors need and want.”
Vanguard states publicly “that climate change, related regulatory changes, and shifts in market dynamics, present material risks (and opportunities) to many companies and their ability to deliver long-term financial returns to their shareholders.” Yet despite this statement, Vanguard’s recently released Investment Stewardship U.S. Regional Brief for 2024 shows that the firm supported none of the 400 environmental and social shareholder proposals examined, including numerous proposals calling for climate risk mitigation.
There is growing evidence that asset owners are becoming increasingly concerned about asset manager’s proxy voting on ESG shareholder proposals and many are taking action. For example, the UK Asset Owner Stewardship Review highlights a growing misalignment between asset owners and asset managers when it comes to exercising stewardship and proxy voting at major oil and gas companies. This misalignment has become more pronounced in recent years on shareholder resolutions (vs management proposals) and at American companies (vs. European ones).
Said Cathy Rowan of Trinity Health, “We believe shareholder engagement, including the filing of proposals, is an important tool to help ensure good corporate governance practices that will result in the positive financial performance of our portfolio companies. As investors and clients, we look to asset managers to strengthen these tools through their proxy voting, and when they don’t, we need to understand why.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on LinkedIn, Bsky and X.
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