Featured Report
Climate in the Boardroom: How Asset Manager Voting Shaped Corporate Climate Action in 2020
Large asset managers have the power to hold climate-critical 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 2020, BlackRock and Vanguard, the world’s largest asset managers and among the top three shareholders in the vast majority of S&P 500 companies, continued to undermine global investor efforts to promote responsible corporate climate action—despite their public commitments to hold corporate directors accountable in the 2020 proxy season.
KEY FINDINGS:
BlackRock and Vanguard voted for nearly all (99%) U.S. company-proposed directors across the energy, utility, banking, and automotive sectors reviewed in this report. BlackRock’s 2020 votes come just months after CEO Larry Fink declared that BlackRock would put climate change at the center of its investment strategy.
BlackRock and Vanguard not only voted with management more often than most of their asset manager peers— they were just as likely to support management at utilities that had not made a net-zero commitment as at those that had made one prior to their annual meeting.
BlackRock and Vanguard voted overwhelmingly against the climate-critical resolutions at S&P 500 companies reviewed in this report, with BlackRock supporting just three of the 36, and Vanguard only four. At least 15 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. These included proposals that would have held JPMorgan Chase’s board accountable for its role as the world’s largest fossil fuel financier and bring much-needed transparency to the lobbying efforts of Duke Energy, one of the largest and highest-emitting electric utilities in the U.S.
Despite joining Climate Action 100+ in early 2020, BlackRock voted against 10 of the 12 shareholder proposals flagged by the coalition, undermining the largest global investor efforts for accountability and transparency in the energy, utility, industrials and automotive sectors.
In contrast, other large asset managers are choosing to set and enforce policies to hold corporate boards accountable if climate-related concerns are not adequately addressed. Legal & General Investment Management and PIMCO had the highest rate of voting against management-proposed director candidates in the energy, utility, banking and automotive sectors and supported all of the shareholder proposals analyzed in this study, voting in favor of improved emissions disclosures and reduction plans, transparency regarding corporate political influence activity, and governance reforms to improve accountability to long-term shareholders.
RECOMMENDATIONS:
Given the urgency to set companies on the path to net-zero emissions, Majority Action recommends that institutional investors vote against chairs and lead independent directors at systemically important carbon emitters that have failed to set targets of achieving net-zero carbon emissions by 2050 at the latest. For asset owners, Majority Action recommends closely examining the proxy voting activities of asset managers, demanding greater transparency on those managers’ voting decisions, calling the asset managers to account for inadequate voting policies and practices, and considering those activities when evaluating and selecting asset managers.