Big Three US money managers cut support for …

Big Three US money managers cut support for climate proposals

In the latest proxy season, the three largest US money managers, State Street, Vanguard Group, and BlackRock, significantly reduced their support for environmental and social shareholder proposals. This shift comes amid a Republican-led backlash against sustainable investing. State Street s investing unit supported 6% of environmental shareholder proposals and 7% of social ones, a decrease from the previous year. Vanguard Group did not back any of the resolutions, while BlackRock voted for 4% of the proposals, down from 7% a year earlier. These three money managers collectively own about 20% of the shares of all companies in the S&P 500, mainly through their index-tracking funds. The decline in support marks a stark turnaround from 2021, when they voted in favor of a record number of proposals focusing on climate change, workforce diversity, and human rights. The drop in support is attributed to the political climate and the rise of anti-ESG resolutions and legislation. However, some pro-ESG resolutions were poorly worded or lacked clear benefits to shareholders, leading firms to reject many of these proposals. Total shareholder support for environmental and social resolutions fell to about 19% during the latest proxy season from roughly 22% in the year-earlier period. The finance industry is facing criticism from GOP politicians for promoting ESG strategies that they believe support liberal goals. Meanwhile, chief executive officers have been downgrading sustainability as a top priority, with concerns about inflation, artificial intelligence, and geopolitics taking center stage. State Street Global Advisors cited increasingly prescriptive and niche environmental and social resolutions as a reason for their reduced support. Vanguard Group rejected all 400 proxy proposals related to environmental and social matters, stating they did not address financially material risks to shareholders or were overly prescriptive. BlackRock also supported few environmental and social resolutions, as they were unconnected to long-term shareholder value. In contrast, some large European money managers remain focused on sustainability, highlighting a divergence in approach between

Source: businesstimes.com.sg
Published on 2024-09-22

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