Wednesday, October 09, 2019

Money Managers Inaction on Climate Change

Investors have been pressing businesses for action to minimise environmental damage through through climate-related shareholder resolutions at corporations annual general meetings. Such moves seldom draw support from the two top U.S. index fund firms, BlackRock Inc and Vanguard Group. BlackRock, the world’s largest money manager and its top rivals, have not put forward any proposals of their own since at least 2001. Their limited support for other shareholders’ climate-related proposals highlights a broader pattern of deference to management at the companies in their stock portfolios, according to a Reuters analysis of their proxy voting records.

The investors who should be the leaders have so far been the laggards,” said Rob Berridge, director of shareholder engagement at Ceres, a Boston-based research and advocacy group focused on sustainability issues.

In 2018, BlackRock and Vanguard only backed 10% and 12%, respectively, of climate-related shareholder resolutions, according to a count by Ceres. A Reuters review of proxy voting disclosures for the 2019 proxy season ended June 30 found similar rates of support by each manager for key votes.

Blackrock’s hesitancy to back climate-related shareholder proposals contrasts with warnings it has raised about financial impacts on businesses from climate concerns. Earlier this year, for example, the BlackRock Investment Institute warned investors in commercial real estate, municipal bonds and utility companies that the value of those assets could tumble because of climate-change impacts.

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