TheCorporateCounsel.net

I think most people who follow corporate governance issue are well aware that support for ESG-related shareholder proposals by major asset managers has declined in recent years, but I’m not sure that people fully appreciate that when it comes to the Big 4, their level of support hasn’t just declined – it’s fallen off a cliff. Here’s an excerpt from a recent report by ShareAction:

The four largest asset managers in the world dominate the sector, holding 39% of the total assets under management (AuM) of all 69 managers we analysed. The ‘big four’ have shown a significant and consistent decline in their support for shareholder resolutions seeking corporate improvements on important environmental and social issues, supporting – on average – one eighth of resolutions in 2023.

BlackRock, the largest asset manager in the world, only supported 8% of environmental and social shareholder resolutions in 2023, whereas in 2021 it had supported 40% of such resolutions. Vanguard, the world’s second largest asset manager, showed the weakest performance of the ‘big four’, supporting only 3% of resolutions in 2023.

All four asset managers voted significantly more conservatively than advised by the leading proxy voting advisors, ISS and Glass Lewis.

The departures from ISS & Glass Lewis’s recommendations are particularly striking. According to ShareAction, ISS recommended yes on nearly 80% of ESG proposals last year, and Glass Lewis recommended yes on about 35%. In contrast, State Street, which was the most supportive of the Big 4 when it came to 2023 ESG proposals, only voted in favor of about 25% of them.

Liz has previously blogged about BlackRock’s explanation for its overall lower levels of support for shareholder proposals in 2023, and Larry Fink mumbled something that might be relevant to this topic last summer, but whatever the reason, it looks like ESG proponents will continue to have a tough time getting traction on their proposals during the upcoming proxy season.

– John Jenkins