Mutual fund managers ‘schizophrenic’ on climate change

Reports singles out Morgan Stanley and State Street for inconsistency.

Some of the world’s biggest mutual fund providers are ‘schizophrenic’ in their concern over climate change, launching new eco-funds on the one hand while opposing climate change related resolutions at polluting companies on the other, according to a report by Ceres, the US investor environmental coalition. The report singled out Morgan Stanley and State Street Global Advisors as being amongst the most persistent voters against climate change resolutions while launching climate related products. Morgan Stanley’s mutual funds supported none of the 215 climate resolutions they faced from 2004-2007. State Street Global Advisors’ mutual funds have opposed all 54 resolutions they faced over the same four-year period. Fund managers such as Fidelity and Janus, it said, abstained on most or all resolutions after opposing them in the past. Conversely, Ceres said Goldman Sachs stood out for its support of climate change resolutions, matching its commitment to launch environmental funds. Nonetheless, the report said that the mutual fund industry’s “previously icy attitude” toward climate change shareholder resolutions is thawing. It analysed the voting records of 1,285 fundsfrom 62 leading mutual fund firms.
From 2004 to 2007, the overall level of mutual fund votes against climate resolutions dropped from more than three out of four (77.8% in 2004) to just under two-thirds (65.1 percent in 2007). Abstention votes have more doubled, rising from 11.9% in 2004 to 24.4% in 2007. The report said: “Ultimately, such schizophrenic behavior is creating financial and reputation risks for these firms – risks easily avoided by adopting more sensible proxy voting policies on climate change.” Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, said: “More mutual fund firms are waking up to the broad financial realities of climate change, but very few are integrating this awareness across all of their business activities, including proxy voting policies. Investors should be scrubbing their portfolios for climate risks just as they’re now scrubbing them for hidden sub-prime risks. Mutual funds that are ignoring climate resolutions aimed at boosting corporate disclosure of climate risks are failing in their fiduciary responsibilities and failing their customers.”