The asset management industry is failing to resolve the vast majority of social and environmental issue in the companies they are invested in, a charity has said.
Of 169 shareholder proposals selected by ShareAction, only 21 per cent of environmental and social resolutions received more than 50 per cent of shareholder support this year, it found.
Furthermore, the industry’s voting performance has not increased significantly since last year. Of the 51 asset managers assessed in both 2020 and 2021, the proportion of “yes” votes for social and environmental resolutions rose a mere 4 per cent.
Resolutions with a stronger focus on action or changing corporate behaviour struggled to achieve more than 30 per cent shareholder support.
For the report, called 'Voting Matters 2021', the charity looked at 169 shareholder resolutions in firms held by 65 asset managers.
“Proxy voting is a core part of an asset manager's fiduciary duty, and a key way in which the sector can influence companies on social and environmental issues,” ShareAction said.
“Yet overall voting performance across the industry remains poor and stagnant.”
The charity also criticised asset managers for not exercising their voting rights, highlighting that seven assessed managers voted on fewer than 60 per cent of resolutions.
“Not voting sends a signal to these companies that their behaviour on environmental and social issues is not of interest to their shareholders,” the charity warned.
Recommendations
ShareAction’s study showed the six largest asset managers in the world had backed fewer shareholder proposals than recommended by proxy advisers ISS and Glass Lewis.
The charity recommends that asset managers take the following actions to improve:
The charity also recommended asset owners use the research to inform their selection and monitoring of asset managers, engage with asset managers when they fall short of expectations as well as to strengthen voting priorities and expectations.
sally.hickey@ft.com