RI Europe 2016: Church of England’s responsible investment head critical of fund managers over climate voting

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Asset managers should serve asset owners when considering how to vote on shareholder resolutions, according to Edward Mason, Head of Responsible Investment for the Church Commissioners, the UK faith investor, particularly when it comes to those addressing climate change and disclosing the risks surrounding it.

Mason’s comments come after the shareholder resolution his organisation co-filed at Exxon Mobil this year, which asked the oil major to report on how its business model would be affect by efforts to reduce a global warming, received 38% shareholder approval. The motion was modelled on the Aiming for A climate resilience proposal that received almost unanimous shareholder approval at BP and Shell’s AGMs last year.

Speaking at RI Europe 2016, Mason said that though he had the support of several of the largest European fund managers when speaking at Exxon’s AGM, the final result was “not acceptable” given how asset managers used their voting powers on behalf of asset owners.

“Asset owners expecting more of their managers is absolutely crucial”, he said. “This was a reasonable disclosure resolution that had passed at BP and Shell, and I’m so grateful for all the support we got for it, but it’s not acceptable. That resolution should have passed.”

“We all need to go back to our fund managers – if we don’t control voting ourselves – and see if we can turn this around.”

Mason’s call coincides with the advent of a new campaign led by Preventable Surprises, the NGOfounded by Raj Thamotheram, that aims to highlight investors who abstain or vote against climate change resolution.

The drive, dubbed the Missing 60%, is inspired by the lack of support for climate change focused resolutions at firms such as Chevron and ExxonMobil, where shareholder resolutions were supported by less than 40% of investors. Investors who either abstained or voted against such resolutions will be made known in August, when investor voting disclosures come out.

Mason also spoke for a need to “maximise the voice of investors” through smart collaboration, and that change would happen at companies like Exxon when engaged through multiple channels, whether through the board, executives, investor relations or shareholder resolutions.

He also said that the effects of climate change on companies represented a “market failure”, compared to the widespread economic effect of phenomena such as the dot com boom or China’s emergence as an economic power.
Mason was on a panel with Bruce Duguid, Director of Engagement at Hermes Investment Management moderated by Mike Tyrrell, Editor at SRI–CONNECT.

Duguid and Mason fought a case for the effectiveness of engagement, with both agreeing that engagement on the part of asset owners was crucial to changing the behaviour of companies.
Duguid cited recent engagement wins at French oil giant Total and mining company Vedanta.

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