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Major US investors inconsistent on key corporate climate votes

Available on the ShareAction website

The 2017 US proxy voting season marked ‘a significant turning point’ in institutional investor support for shareholder resolutions on climate-related risk, new analysis by ShareAction finds.

Using data from Proxy Insight, the report is the first analysis of how major investors voted during the 2017 US proxy season in seven high-carbon companies on shareholder resolutions addressing climate-related risk management.

Many large US asset managers, such as BNY Mellon, American Century, and Dimensional Investors, continued in 2017 to give corporate management of high-carbon companies their apparently uncritical support.

In addition, there was considerable inconsistency with many investors voting for some and against other essentially identical resolutions at different companies, the study finds. Major investment firms, such as Blackrock and Vanguard, chose this year to support high profile shareholder resolutions on corporate climate risk at Exxon and Occidental, while opposing resolutions at the remaining five companies.

In every instance, management and boards of the companies rejected the resolutions and recommended shareholders vote against them.

Toby Belsom, Head of Investor Research & Analytics at ShareAction and author of the report, says: “Mainstream investment firms and pension schemes are now willing to back key resolutions in defiance of corporate management. To act in the best interests of their clients and beneficiaries, they must start being more consistent in supporting these resolutions across the board. Asset owners need to challenge their asset managers to explain voting patterns, inconsistencies, and divergence from major proxy advisers.”

Fidelity Management & Research Co and Goldman Sachs Asset Management were the two asset managers who made the most significant move from supporting company management in 2016 to supporting independent climate change resolutions in 2017. Furthermore, a number of major investors – including major European shareholders – stand out as highly reliable supporters of climate-related shareholder resolutions. Where they were a top 30 shareholder, Northern Trust, Morgan Stanley, Deutsche Asset Management, LGIM, Norges, UBS, and TIAA were consistent supporters of all resolutions examined in this study.

Catherine Howarth, Chief Executive of ShareAction, says: “We’re pleased to see that fund managers who consistently support management with their proxies are becoming the minority, following a surge in climate accountability by major US investors this year. This comes at a crucial juncture as President Trump proposes to pull the US out of the Paris Agreement on climate change.”

The recommendations made by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures add pressure on companies to make public their strategy for mitigating the risks of climate change.

Notes for editors:

  • For more information, please contact Beau O’Sullivan on osullivan@shareaction.org or +44203 475 7859 / +44 7950 299 491
  • A full version of the report can be found here.
  • All data in the report was taken from Proxy Insight.
  • The seven companies in the report are Occidental, Exxon Mobil, PPL Corporation, Southern Energy, DTE Energy, Devon Energy, and Kinder Morgan.
  • Climate resolutions received the following support from shareholders this year: Occidental 67%; Exxon Mobil 62%; PPL Corporation 57%; Southern Energy 46%; DTE Energy 45%; Devon Energy 41%; Kinder Morgan 38%.
  • BNY Mellon, American Century, and Dimensional Investors all supported a climate resolution at BP in 2015.
  • We have chosen to exclude JNL Investments and WisdomTree investments from our voting analysis on account of their autonomy from BNY Mellon in voting on shareholder resolutions.
  • A breakdown of the 2017 voting record of the top 30 shareholders in these seven companies can be found in the appendix of the report.

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Published on: 2nd October 2017

Filed Under: News, Reports

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