Largest asset managers' support for shareholder votes on climate and diversity rises sharply 

ESG

Five of the world’s largest asset managers – BlackRock, Vanguard, State Street, Fidelity, and JPMorgan – have dramatically increased their support for shareholder proposals on topics relating to the environment and diversity during this year’s proxy season, according to new data from analytics provider Insightia.

Insightia analysed almost 25 million proxy votes for the 2020/2021 proxy season in the US and Canada, running from July 1 to June 30.

“The five largest institutional investors increased their support of environmental shareholder proposals by an average 13 percentage points between the 2020 and 2021 proxy seasons, compared with four percentage points for all investors,” writes Insightia in a recent report, ‘Proxy Voting Season Snapshot 2021’.

BlackRock, the world’s largest asset manager with USD9.5 trillion in assets under management, showed the biggest increase in support for environmental proposals out of the ‘big five’ managers. 

Insightia’s data shows that BlackRock backed 54.1 per cent of shareholder proposals on environmental issues in the most recent proxy season. 

This figure has jumped from last year’s proxy season, when BlackRock supported only 16.2 per cent of environmental votes. 

BlackRock adjusted its proxy voting guidelines in December 2020, to give a greater emphasis to climate change and board-level diversity.

“Climate change has become a defining factor in companies’ long-term prospects,” wrote BlackRock chief executive Larry Fink in an annual letter to CEOs in 2021.

State Street voted for the highest percentage of environmental proposals out of the ‘big five’ managers, supporting 56.8 per cent this year, rising from 48.6 per cent in 2019/2020. 

‘Big five’ support still lagged behind the average investor’s enthusiasm for environmental proposals, with the average of all investors coming out in support of 60.5 per cent of such votes.

Meanwhile, Fidelity was the only asset manager that supported the majority, 83 per cent, of ‘Say on Climate’ proposals.

The Say on Climate initiative calls on companies to hold annual non-binding shareholder votes on their greenhouse gas (GHG) emission reduction plans.

BlackRock supported half of proposals to adopt Say on Climate, with Vanguard and State Street supporting one third, and JPMorgan backing one in five votes.

Social proposals also garnered increasing support from the asset managers, with diversity proposals leading the way.

“Support for diversity proposals from the five investors increased by an average of 30 percentage points,” writes Insightia.

When it came to social proposals, BlackRock backed 44.3 per cent of shareholder votes, compared with only 11.5 per cent in 2019/2020 proxy year. 

This includes voting for 68.2 per cent of proposals around diversity, a figure which has jumped from 13.6 the year before.

According to BlackRock Investment Stewardship, “diversity and the inclusion of different perspectives for board discussions and decision-making, is a globally relevant feature of board quality and effectiveness”.

Meanwhile, State Street voted for 35.6 per cent of social proposals and almost half, 47.6 per cent of diversity proposals. Vanguard backed 29.6 per cent of social proposals, and 60 per cent of diversity proposals. 

Support for social proposals is still significantly lower than the average of all investors, who voted in favour of 52.1 per cent of proposals in 2020/2021 season.
 

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