Plans to tackle environmental risks ‘got record-low support from asset managers’

Proposals aimed at tackling environmental and social risks saw record-low support from asset managers at shareholder meetings last year, according to an analysis.

ShareAction, which campaigns for responsible investment, found that only 1.4% – four of the 279 shareholder resolutions it assessed – received majority support in 2024, down from 21% in 2021.

Resolutions can be put forward by company shareholders, asking the board to take certain actions on issues like corporate governance, environmental and human rights risks, diversity and inclusion, and bosses’ pay.

They are then voted on at a shareholder meeting, usually annual general meetings (AGMs), and while not legally binding, significant support can put pressure on the board to respond to the matters raised.

ShareAction’s annual Voting Matters report, released on Tuesday, found that four of the world’s largest asset managers – BlackRock, Fidelity Investments, State Street Global Advisors and Vanguard – voted against shareholder proposals aimed at protecting human rights, nature and climate last year.

The researchers assessed that an additional 48 shareholder resolutions would have passed had they been backed by these four firms, which have significant clout and together manage tens of trillions of dollars in assets.

A cited example was the lack of support for a resolution asking Cadbury owner Mondelez International’s board to provide greater disclosure over the operational and reputational risks associated with the firm’s continued operations in Russia since the invasion of Ukraine.

The report said just two out of 73 shareholder resolutions on climate change received enough shareholder support to pass.

However, it did not include how these firms voted on resolutions that were against the principles of environment, social and governance (ESG), with Blackrock also opposing such proposals in their 2024 voting.

Asset managers also argue that they engage with the board on a host of matters including ESG, rather than vote for what they would consider prescriptive asks put forward in shareholder resolutions.

ShareAction claim that had asset managers supported shareholder proposals put forward at 190 companies, it may have helped to improve conditions for low-paid workers struggling with the global cost-of-living crisis and driven climate action at a time when impacts from warming are devastating communities worldwide.

Claudia Gray, the charity’s head of financial research, said their findings were the “the worst result we’ve seen from asset managers in the six years we’ve been monitoring their voting performance”.

It signalled a “worrying retreat from ambition when it’s most needed”, she added.

“If ever we needed asset owners to be the drivers of responsible investment, it’s right now. We need their leadership to hold asset managers to account at such a critical time for people and planet.”

Amid corporate America’s shift back towards more conservative political and social stances, the report noted a split between asset managers voting on shareholder resolutions in the US and Europe last year.

UK and European asset managers supported 81% of shareholder proposals on average, compared to 25% for their US counterparts, according to the findings.

ShareAction put the discrepancy down to higher corporate transparency standards set by regulators in Europe as it urged EU nations and the UK to hold strong on this policy direction as the US pulls away.

Trends this year also included a surge in shareholder proposals focusing on artificial intelligence (AI), with many asking for disclosure on risks such as misinformation being increased by the technology, albeit receiving little support.

Proposals relating to companies’ impact on nature and biodiversity also increased, signalling growing shareholder concerns over long-term risk in this space.

Given the backdrop of conflicts and growing geopolitical instability, ShareAction also highlighted the lack of support for human rights-related resolutions at weapons companies.

Ten asset managers, including the four largest in the world, voted against such proposals put forward at Lockheed Martin, RTX and Northorp Grumman, which aimed to improve transparency over the firms’ lobbying activities and human rights impact.

Ms Gray said: “We live in a world where asset managers have a huge impact through the companies they invest in.

“Many claim to be playing their part in tackling important issues like climate change, yet our report calls into question whether the majority of the world’s wealth is being managed effectively by investment firms.

“What’s clear is we need better regulation from policymakers and bold leadership and ambition from decision-makers across the financial sector.”

A BlackRock spokesperson said the firm’s voting decisions are based on the long-term financial interests of its clients.

“For the 2024 proxy year, we found that most environmental and social shareholder proposals were overreaching, lacked economic merit, or were unlikely to promote long-term shareholder value,” they said.

The firm said it has two programmes that allow eligible clients to participate in the proxy voting system themselves, and a decarbonisation stewardship programme for clients who explicitly direct the firm to invest their assets with green objectives.

“The most important perspective is that of our clients – a majority of which continue to delegate voting authority to the BlackRock Investment Stewardship team notwithstanding the number of options that allow them to vote proxies themselves or to align their mandates with specific goals.”

The PA news agency contacted Vanguard, Fidelity Investments and State Street for comment.