US asset managers lack voting policy consensus on climate and social matters
Asset managers’ voting policies differ on environmental and social issues, including Scope 3 emissions reporting
The largest US asset managers are divided on a number of environmental and social matters, according to an analysis of their voting policies by Morningstar.
The financial services company analysed the voting policies of 10 of the biggest US asset managers, including BlackRock, Fidelity and State Street, considering their approaches to six environmental and social issues. It also considered the voting policies of five big European managers and five sustainability-focused managers.
Morningstar separated the wording of the managers’ policies into three categories: supportive, neutral and unsupportive. It viewed policy wording as supportive if it demanded or encouraged company disclosures on the relevant environmental or social topic; neutral if the manager made voting decisions on a case-by-case basis; and unsupportive if it appeared unlikely to back proposals calling for disclosures.
There was broad consensus among the US managers’ voting policies in favour of Scope 1 and 2 greenhouse gas emissions disclosures, as well as workforce-related disclosures. But they were more divided on Scope 3 reporting, either outright rejecting this type of disclosure, adopting a neutral stance, or not addressing it in their voting policies.
There was also a lack of consensus on proposals concerning nature and biodiversity, an area that attracted universal support in the voting policies of the European and sustainability-focused managers assessed by Morningstar.
The company identified a weak relationship, however, between supportive language in a manager’s voting policy and how the manager actually votes. Some of the largest US managers with supportive policy language rejected environmental and social proposals on the grounds that they were too specific or mimicked existing action taken by the companies in question, it noted.
“Supportive policy language does not necessarily translate into high support for environmental and social proposals on the proxy card,” said Morningstar director of investment stewardship research Lindsey Stewart.
You can read the full report here.