Executive Summary
Climate, Inequality, Unaccountable Technology
How Major Asset Managers’ Index Funds Voted in 2025
Economy-wide disruptions from climate, inequality, and unaccountable technology are serious, growing, and increasingly visible. These are not diversifiable risks; they are systemic threats that erode portfolio value and imperil the long-term financial security of millions of hard-working Americans. 2025 began with a dozen devastating wildfires in Los Angeles, which caused hundreds of deaths¹ and economic losses that could exceed a quarter-trillion dollars², while rampant data center buildout delays³ the retirement of coal plants across the country, accelerating climate risk. Furthermore, growing inequality – since 2020, 41% of new wealth has gone to the world’s richest 1% – is further undermining democratic and economic stability.⁴ These pervasive risks necessitate that institutional investors use their influence to mitigate the threat. This report examines the major asset managers’ efforts on that score in the past year.
Since 2020, 41% of new wealth has gone to the world’s richest 1%.
These large, system-level threats underscore the need for institutional investors—particularly those managing broadly diversified portfolios—to adopt systemic stewardship that prioritizes the health of the entire economy. To effectively mitigate these risks, managers of diversified index funds must act on behalf of their clients, whose long-term financial stability depends on addressing these market-wide externalities rather than individual company performance. This edition of Accountability in the Boardroom provides a fund-level assessment of how key asset managers put this responsibility into practice.
Previous analyses of proxy voting have often overlooked distinctions between fund types, thereby obscuring the influence of mandates and exposures to systemic risks inherent in diversified portfolios. This report closes the gap by focusing on the proxy voting and stewardship practices of 67 large index equity funds during the July 2024–June 2025 proxy season. The analysis specifically targets the voting behavior of these systemically important "universal owners" on a universe of 138 shareholder proposals and 26 management proposals at Russell 3000 companies, focusing on resolutions related to climate change, inequality, and unaccountable technology—material issues that pose systemic, market-wide risks. By scrutinizing the voting records of these funds, which manage substantial capital and embody long-term investment horizons, the report aims to assess the extent to which they prioritize mitigating these broad economic externalities versus focusing solely on individual company performance.
Our analysis reveals that the largest asset managers, who command the largest index equity funds, appear to have effectively abdicated the responsibility for mitigating system-level risk through stewardship practices. In contrast, smaller index equity funds with fewer resources have emerged as the leaders in responsible stewardship. While these smaller funds more closely demonstrate the alignment predicted by their investment objectives (matching the benchmark return), investment strategies (buy-and-hold), tracking of similar broad-based indices, and comparable exposure to system-level risks, their ability to change corporate standards and mitigate system-level risks at scale is ultimately limited by virtue of their size. This creates a fundamental accountability problem, where the funds with the greatest capacity to influence system-wide outcomes are those showing the least commitment to systemic stewardship.
Key findings
Shareholder proposals
Majority Action analyzed how broad-based index equity funds voted on 133 shareholder proposals that addressed system-level risks related to climate change, inequality, and emerging technology.
Our analysis found significant disparities in index funds’ proxy voting despite the fact that these funds share the same investment objectives (matching the benchmark return), use the same investment strategies (buy-and-hold), track similar broad-based indices, and have comparable exposure to system-level risks.
Voting power is disproportionately concentrated in the hands of mega funds (>$100B AUM), which are uniquely positioned to shift corporate behavior at scale and mitigate system-level risks through proxy voting. However, managers of mega funds were the least likely to vote for shareholder proposals addressing system-level issues.
Climate Director Votes
For the 2025 proxy season, Majority Action recommended against the re-election of directors with the responsibility of climate-related oversight at eight companies with poor climate performance spanning the electric utilities, oil and gas, banking, and insurance sectors. Our analysis of how index equity funds voted in director elections at these eight companies reveals that European managers and managers of some mid-size and large funds are leading the way on board accountability.⁵
With the exception of UBS, managers of European funds voted on average for just 50-63% of directors responsible for climate oversight. Among managers of mid-sized funds, New York Life outperformed all funds on director accountability (38%)
Nuveen and State Street had the best voting performance among large managers (75%). Mega fund managers were far less critical of inadequate board oversight, supporting, on average, 88-100% of directors responsible for climate oversight.
Say-on-Pay
Shareholders at most publicly traded companies cast annual advisory votes on executive compensation (“say-on-pay”). Shareholders seeking to mitigate systemic inequality risk can and should vote against say-on-pay proposals at companies whose CEO to median worker pay ratios exceed a specified threshold. Majority Action examined how funds voted on say-on-pay proposals at S&P 500 companies with extreme levels of intra-firm inequality relative to their peers.
Our analysis found that European managers and managers of mid-size funds were once again more likely to vote against say-on-pay proposals than managers of large and mega funds. The largest index fund managers, Fidelity and Vanguard, supported 94% and 100% of say-on-pay proposals, respectively.