Big NZAM members supported less than half of environmental proposals in 2023

NYC comptroller bemoans ‘woeful’ showing by US managers as latest ShareAction report reveals a gulf between US and EU-based investors on ESG proposals.

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Eleven of the largest signatories to the Net Zero Asset Managers initiative (NZAM) supported less than half of the 114 environmental proposals assessed in the latest Voting Matters report by ShareAction.  

The UK campaign group’s fifth iteration of the annual analysis investigated the voting of 69 of the world’s largest asset managers across 257 environmental and socially focused shareholder proposals that went to the vote in 2023.  

Signatories to NZAM commit to “implement a stewardship and engagement strategy, with a clear escalation and voting policy, that is consistent with our ambition for all assets under management to achieve net zero emissions by 2050 or sooner”. 

Despite this, eleven of the largest managers listed on NZAM’s website were found by ShareAction to have supported less than 50 percent of environmental shareholder proposals, more than 100 of which addressed climate change.  

Three of those – BlackRock, T Rowe Price and Capital Group – supported less than 10 percent of such resolutions, according to the analysis. 

Moreover, support for environmental proposals fell for 10 of these managers in 2023 compared with the previous year. Only Edinburgh-based Baillie Gifford bucked that trend, supporting 47 percent of environmental proposals in ShareAction’s sample in 2023 compared with 29 percent in 2022.  

The largest fall in support among the 10 was seen at Wellington Management (32 percentage points) and Capital Group (29 percentage points).

Overall, however, membership to NZAM was found to have a “marginal beneficial impact” on climate votes, with average support for such proposals sitting at 65 percent for signatories compared with non-members’ 41 percent. 

A spokesperson for BlackRock told Responsible Investor that the investment behemoth analyses each resolution on a case-by-case basis and with their clients’ long-term financial interests in mind.  

“In 2023, because so many proposals were over-reaching, lacking economic merit or simply redundant, they were unlikely to help promote long-term shareholder value and received less support from shareholders, including BlackRock, than in years past,” they said.   

In September, a stewardship professional at a mainstream asset manager told RI that claims around the prescriptiveness of proposals by some US managers have been exaggerated.

They said that while it was “objectively” true that proposals have become more prescriptive over the last two or three years, the extent to which that is the case has been overstated. They suggested that around 5 percent of proposals have become more prescriptive each year from 2021, and “not 30 percent” this year.   

A Capital Group spokesperson told RI that it assesses “each shareholder proposal against our internal proxy voting guidelines, conducting company-specific research, with our investors making the final voting decisions.” 

T Rowe Price also said that it assess proposals on a “case-by-case” basis.

“Since 2021, the market has experienced a 74 percent increase in the number of environmental and social resolutions voted at companies within the S&P 1500 index. However, this sharp increase in volume has coincided with a decrease in the overall quality of proposed resolutions,” its spokesperson told RI.

Wellington Management had not responded to a request for comment at the time of writing.

A spokesperson for NZAM told RI that the initiative “does not track the individual voting activity of its signatories and such activity is not covered within the initiative’s commitment statement”.  

“While the initiative encourages signatories to support robust and impactful shareholder resolutions which align with their commitment to NZAM, signatories may also choose not to support a resolution for a variety of reasons, including if they feel it lacks clarity, is insufficiently substantiated or if engagement on similar issues is ongoing via direct contact with the investee company.”    

US-Europe chasm  

ShareAction’s latest report also revealed that the gap between European and US asset managers has grown further when it comes to support for environmental and social proposals.  

US asset managers supported on average just a quarter of proposals – a drop of 15 percentage points from 2022 – whereas those based in Europe averaged 88 percent in 2023. A similar finding was reported by Morningstar today (Thursday).

Commenting on this disparity, New York City comptroller Brad Lander, whose office oversees the city’s five public pension funds, told RI: “It is disappointing that US-based asset managers have unfortunately chosen silence in the face of a challenging year including misinformed pushback from red states.

“At a time when the financial community should be sending a clear message, European asset managers continue to lead by prioritising the mitigation of ESG risks as their US peers fall woefully behind. It is time we close the gap.”