Mellon Investments, the index specialist subsidiary of US financial heavyweight BNY Mellon, has become the first and only Climate Action 100+ member to be delisted, following its failure to meet the investor group’s minimum requirements “to engage with at least one focus company during each year of the initiative”, a spokesperson for CA100+ told Responsible Investor.
CA100+, which is backed by 700 investors representing more than $68 trillion in assets under management, targets the world’s largest polluters with the aim of steering them towards low carbon futures.
Each of the initiative’s 166 target companies, which collectively account for around 80 percent of global corporate emissions, are assigned between one and three investors to lead engagements. Signatories can also join as supporting investors.
The spokesperson added: “Climate Action 100+ hasn’t asked any of its investor signatories to leave the initiative. Signatories either meet the requirements as set out by the initiative or they are subject to delisting.”
RI understands that the action took place in October.
Three other BNY Mellon subsidiaries – Insight Investment, Newton Investment Management and Walter Scott & Partners – remain members of CA100+.
Mellon Investments appears to have engaged with at least one CA100+ target in 2021, stating in its proxy voting report for the year that it held “multiple engagements with Exxon Mobil Corporation and the dissident in the proxy contest, Engine No 1″.
The investment firm also revealed that it supported all four candidates put forward by activist investor Engine No 1, a more progressive approach than many given that only three out of the four made it on to the US oil major’s board.
“Proxy voting and engagement” were described by Mellon Investments in the report as “one of the main fiduciary pillars of our business and one of the most important tools we can utilise in order to serve our clients and influence positive outcomes as investment managers of index portfolios”.
Mellon Investments’ delisting is not the first time a BNY Mellon subsidiary has faced scrutiny over its ESG activities. In May, BNY Mellon Investment Adviser agreed to pay a $1.5 million penalty to the US Securities and Exchange Commission (SEC) to settle charges of “misstatements and omissions” about ESG considerations in making investment decisions for “certain mutual funds that it managed”.
Walter Scott & Partners was also ranked bottom in an assessment by UK campaign group ShareAction of the voting practices of large asset managers on environmental and social shareholder proposals in 2022. The report, which was published last month and covered 68 investment firms, revealed that the BNY Mellon subsidiary supported none of the environmental proposals among the 252 proposals assessed.
CA100+ recently celebrated its five-year anniversary, completing the initial timeframe set out when it launched in 2017. The initiative is in the process of formulating the approach for its second phase, following a consultation among its membership which ended in September. Details of the second phase are expected to be published in the summer.
A spokesperson for Mellon told RI that it was not aware of any correspondence from CA100+ and has “immediately contacted them to identify what happened”. “We remain committed to the goals of Climate Action 100+ and look forward to renewing our membership status at the earliest opportunity,” he added.
On its engagement efforts the spokesperson said, “As a leading index manager, Mellon has a comprehensive engagement programme and we can confirm that in 2022 we actively engaged with a number of companies on the Climate Action 100+ engagement list.”
*The comment from Mellon was added after publication.