Asset managers BlackRock and Vanguard have been branded “hypocritical” for their stance on the climate change policy of US oil giant ExxonMobil, a company in which they are both major shareholders.
The accusation came from the Asset Owners Disclosure Project, a not-for-profit campaign group that concentrates on climate change investment risk.
In a new report, the Asset Owners Disclosure Project analysed a recent shareholder vote on a resolution to force ExxonMobil to assess climate risk to its business.
The vote, which took place at the oil company’s annual general meeting, defeated the resolution by 62 per cent to 38 per cent.
The AODP branded BlackRock and Vanguard, which together own 11 per cent of the company, hypocritical because they voted against the motion despite being signatories to the United Nations Principles of Responsible Investment, or UN PRI.
The AODP claimed by voting against the motion, the investment managers were violating UN PRI’s third principle: “We will seek appropriate disclosure on ESG issues by the entities in which we invest.”
JP Morgan, Capital Group and Franklin Templeton were also singled out for voting against the resolution.
State Street Global Advisors, which owns 4.5 per cent of the company, voted in favour of the resolution.
FTAdviser contacted both BlackRock and Vanguard for comment.
A spokesperson for BlackRock said the firm prefered “to engage with companies directly on complex issues such as adaptation to a low carbon economy” adding: “Where a company is unresponsive, we hold board members accountable.”
A spokesperson for Vanguard said the company was “committed to the management of environmental, social and governance (ESG) issues as an element of prudent investment and responsible portfolio ownership practices”, adding its voting record and engagement activities were “entirely consistent” with its UN PRI commitments.
Julian Poulter, chief executive of Asset Owners Disclosure Project, said climate change posed “a clear threat to the business model of fossil fuel companies” adding shareholders had “a right to know how Exxon plans to manage climate risk”.
He went on: “Asset managers and asset owners who helped Exxon defeat this modest climate resolution are not only risking their own money, they are betraying the millions of ordinary people whose pensions are invested in Exxon stock.
“Our analysis also reveals disturbing hypocrisy, with many investors ignoring responsible investment commitments they have made.”
The report also heavily criticised pension funds for failing to take the issue of climate change investment risk seriously. It found that 1,069 pension funds around the world were contacted by members asking them to vote in favour of the motion. Only 35 funds responded, AODP claimed.
Of the funds that did respond, the most common reason given for not divulging voting plans was that they relied on their asset managers to vote. Three said they invested through pooled funds and one said it relied on proxy voting advisers.
Lisa Hardman, a financial adviser and director of Investing Ethically, said if firms like BlackRock and Vanguard were voting against motions of this sort, “you have to wonder why they sign up to the UN PRI”.
While she said the UN PRI was a good thing, she said the best way to find out whether an investment manager was serious about responsible investment was to talk to the managers and analysts.
She mentioned Eden Tree, Alliance Trust, Henderson and Rathbone as being among the managers providing good responsible investment options.
Ms Hardman said her clients - who are predominantly women in their mid to late-50s with an average pot-size of around £200,000 - generally put climate change-related issues at the top of their list of concerns, alongside human rights.
james.fernyhough@ft.com
