Support for Paris-aligned lobbying proposals halved at US firms in 2022

Data from Morningstar reveals ‘noticeable year-on-year decline’ in support for lobbying proposals, driven by largest US investors.

Average support for Paris-aligned lobbying shareholder proposals at US firms halved last year, dropping to 31 percent from 61 percent in 2021, according to data from Morningstar.  

On Tuesday, the US data giant published a paper exploring support for resolutions seeking greater transparency around lobbying and political activities at US companies, including the voting practices of the 10 largest US asset managers.  

Average support for the 48 proposals that went to the vote last year was 35 percent, 6 percentage points lower than the average for 2021.  

The average tally for 2022 was also lower than the average for the last three years (38 percent), during which time 149 lobbying and political activity resolutions went to the vote – with 54 in 2020, 47 in 2021 and 48 in 2022 

This drop-off “represents a noticeable year-on-year decline as asset managers were less inclined to support what they saw as prescriptive or duplicative shareholder resolutions in 2022”, Morningstar wrote.  

Climate-related lobbying proposals requesting disclosure on how a firm’s political advocacy is consistent with the goal of the Paris climate agreement saw the steepest fall. Morningstar noted, however, that average support for these proposals equated to 43 percent – 18 percent less than the year before – when insider management votes were discounted. 

In the 2020 and 2021 proxy seasons, the 10 US managers assessed cast more than half of their votes for the nine Paris-aligned lobbying proposals. However, this fell to 35 percent for the three resolutions that went to the vote in 2022.  

The performance of the US managers contrasts with that of their European peers. Morningstar found that a cohort of eight of the largest European managers – including BNP Paribas Asset Management, Legal and General Investment Management and Schroders –supported more than 90 percent of the climate lobbying resolutions, with five supporting all 12.

Morningstar also revealed that BlackRock supported none of the climate lobbying proposals in 2022. The report highlighted that such proposals were identified by the US investment behemoth as one of the “prescriptive climate asks” it raised concerns about in its May bulletin. 

BlackRock’s rival Vanguard has also expressed concerns that shareholder proposals on social and environmental issues have become more “prescriptive” last year.   

Such concerns surfaced as US financial firms have increasingly found themselves in the crosshairs of conservative anti-ESG rhetoric and boycotting legislation in Republican states. 

Morningstar found that overall support for climate-related lobbying proposals was 49 percent on average over the last three years, with the US managers supporting slightly fewer at 47 percent.  

Dimensional, BlackRock and Fidelity showed the lowest average support of 11, 27 and 30 percent, respectively.  

Support among the US financial heavyweights was not uniform, however, with JPMorgan Asset Management and Invesco among those casting more than 80 percent of their fund votes in favour of the 12 climate lobbying proposals over the last three proxy seasons.