T. Rowe Price, the trillion-dollar global asset manager, has petitioned regulators to allow the omission of a shareholder resolution critical of its voting record on climate change.
The resolution, filed in December by sustainability-focused boutique Zevin Asset Management, requests a report on T. Rowe Price’s proxy voting policies on climate change, and an accompanying assessment of “any incongruities” between the manager’s public statements and pledges regarding climate change and its voting policies and practices.
According to Zevin’s filing, T. Rowe Price as a “respected leader” in the industry has acknowledged the materiality of climate change within its “Responsible Investment Guidelines” and “ESG Policy”, and further is a signatory to the Principles for Responsible Investment (PRI) which “encourages investors to vote conscientiously on ESG issues”.
Yet, the Baltimore-based giant only voted for 24% of climate change-focused shareholder resolutions in 2019, compared to peers such as PIMCO, Legg Mason, Invesco and UBS which “supported the majority” of such resolutions.
This is the second shareholder resolution Zevin has filed at the asset manager over its climate change voting record; it withdrew a submission last year saying that it would continue to engage management and monitor T. Rowe Price’s voting performance. Zevin previously backed similar resolutions at the company in 2017 and 2016, which gained 9% and 8.5% shareholder support respectively.
In response, T. Rowe Price has submitted a ‘no-action letter’ to the SEC – a mechanism by which companies seek regulatory approval to exclude shareholder resolutions from the AGM ballot.
"We think that T. Rowe Price is in a risky position over its voting performance on climate change" – Zevin
In its no-action letter, T. Rowe Price argued that the proposal is not limited to the publication of a report but rather “seeks to modify the practices and policies of [its investment management business] by contrasting their practices with those of ‘funds managed by investment firms such as PIMCO, Legg Mason, UBS, and Invesco’”.
“Even if the Proposal were to touch on the significant policy issue of climate change, the Proposal’s request focuses on the Company’s ordinary business matters,” the letter continues.
Additionally, T. Rowe Price states that as a “corporate holding company”, it “does not have a role in establishing or determining any ‘voting policies and practices related to climate change’”.
“While the Company derives the vast majority of its consolidated net revenue and net income from investment advisory services provided by (its subsidiaries), the Company does not manage assets, nor does it vote any proxies, and accordingly does not maintain any proxy voting policies at the Company level.”
In a statement provided to RI, T. Rowe Price spokesperson Brian Lewbart said: “Assessing a broad range of investment concerns – including climate change – is integral to our investment process.
“It is not our objective to use our vote to increase the level of conflict with the companies where our clients hold investments. Instead, our objective is to use our influence – through both engagement and proxy voting – to increase the probability that the company will outperform its peers, enabling our clients to achieve their investment goals.”
Responding to the no-action letter, Pat Miguel Tomaino, Zevin’s Director of Responsible Investment, told RI: “Our position hasn’t changed since we first filed the proposal. We think that T. Rowe Price is in a risky position over its voting performance on climate change, which is currently in the bottom quartile compared to its peers.
“We intend to file a response to T. Rowe Price’s letter with the SEC sometime this week.”
T. Rowe Price is one of a number of blue-chip managers facing shareholder proposals over their alleged failure to align voting records and policies with a progressive public stance on climate change.
BlackRock – recently celebrated for unveiling new ESG policies including enhanced voting disclosure – Vanguard and JP Morgan have all had shareholder resolutions filed by a group of sustainability and faith-based investors such as Mercy Investments and Boston Trust Walden.