Climate in the Boardroom: How Asset Manager Voting Shaped Corporate Climate Action in 2019
Large investors have the power to hold energy and utility companies accountable to undertaking the urgent transformations that our climate crisis demands. But while some top investment managers are leading the way, BlackRock and Vanguard persist in using their shareholder voting power to shield corporate boards from accountability. In 2019, the world's largest asset managers often used their shareholder power to undermine global investor efforts to hold recalcitrant fossil fuel and utility companies accountable for their failures on climate and their irresponsible lobbying.
BlackRock and Vanguard voted for 99% of U.S. large capitalization energy and utility company-proposed directors and 100% of their say on pay proposals. BlackRock and Vanguard not only voted with management more often than most of their asset manager peers; they were also more likely to support management at these fossil fuel intensive companies than they did across U.S. equities overall.
BlackRock and Vanguard voted overwhelmingly against the climate-critical resolutions reviewed in this report, with BlackRock supporting just five of the 41, and Vanguard only four. At least 16 of these critical climate votes would have received majority support of voting shareholders if these two largest asset managers had voted in favor of them.
BlackRock and Vanguard voted against all of the U.S. shareholder proposals backed by the Climate Action 100+ investor coalition, backed by $34 trillion in assets, undermining the largest global investor efforts for accountability and transparency in the energy and automotive sectors.
In contrast, other large asset managers chose to set and enforce policies to hold corporate boards accountable if climate-related concerns are not adequately addressed. Legal & General Investment Management, BNP Paribas Asset Management, PIMCO, and Standard Life Aberdeen had the highest rates of voting against director candidates in the oil and gas and utility industries.
Based on these findings, Majority Action recommends that asset owners closely examine the engagement and proxy voting activities of the asset managers they engage, call the asset managers they hire to account for inadequate voting policies and practices, and consider those activities when evaluating and selecting asset managers. Policymakers should consider reforms to ensure transparency, regulate conflicts of interest, and address the rapidly increasing market share of the largest asset managers.