Published on 15 October 2019

SUSTAINABLE FINANCE

Blackrock, Vanguard, JP Morgan : big investors declare climate engagement but rarely vote in its favor

The American organization Majority Action recently reviewed the voting trends of the world’s top 25 asset management firms’ shareholder resolutions, as they pertain to the climate. The result: major actors, such as BlackRock and Vanguard voted almost systematically against climate-related resolutions, despite their numerous declarations concerning global warming risks.

During the 2019 annual meeting, BlackRock most often voted against climate-related resolutions.
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Major asset managers don’t always vote in favor of the climate… far from it. The American organization Majority Action recently reviewed the voting trends of the world’s top 25 asset management firms during the recent wave of annual meetings hosted by American energy and utility companies. They found that BlackRock, who manages more than $6 trillion, only supported five of the 41 climate-related shareholder resolutions under review.

Vanguard, BlackRock’s competition in terms of size with almost $6 trillion dollars in assets under management, did not perform much better. They only supported four climate-related resolutions. Two additional American asset managers, JP Morgan asset management affiliates and Prudential Financial, also voted for less than 15% of climate-related resolutions.

Yet these are the same investors that tend to publicly declare their climate engagement.  Such is the case for Larry Fink, president of BlackRock, who regularly stated in his annual letter to investors the need for companies to better account for the climate crisis.

On the other side of the spectrum, actors such as Pimco, NP Paribas, DWS Group and Legal & General Investment Management, have supported climate-related resolutions more than 95% of the time.

Lack of shareholder engagement

This study has hit them where it hurts. Today, assets managers increasingly tend to take environmental, social and governance (ESG) criteria into account.  However, some have difficulty taking the next step in shareholder engagement, in order to truly transform the companies in which they invest.

BlackRock traditionally explains that its shareholder engagement is on-going throughout the year, involving meetings with company leaders where they express their grievances. “While dialogues with companies are important for communicating concerns and resolving issues, voting on directors, executive compensation, and shareholder resolutions is a far stronger tool for long-term shareholders to communicate the strength and urgency of their position when companies are not yet aligning their strategies to ambitious decarbonization goals,” wrote Majority Action in their most recent report.

For now, it appears that assets holders must examine the asset management firms in which they confide and how they exercise their right to vote.  Since the release of their report, Majority Action recommends evaluating asset managers’ shareholder engagement policies to verify that they are operating in accordance with their own carbon-related engagements.  The organization has even suggested that asset holders change asset managers while imposing climate-related voting criteria in mandate contracts.

Arnaud Dumas, @ADumas5


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