Not very engaging

28 November 2019 By George Hay Follow @gfhay

Big index funds justify holding stocks with poor environmental, social and governance profiles by pledging to engage with their bosses. New research suggests this isn’t working. While there’s merit in naming and shaming, pension funds voting with their feet is more effective.

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The world’s 15 largest asset managers with $37 trillion in assets under management are collectively failing to drive forward the transition needed to support international climate targets, think tank InfluenceMap said on Nov. 27.

InfluenceMap’s study found that only three of the biggest asset managers, Allianz, Legal & General and UBS Asset Management, strongly and consistently engage with the companies they invest in to align their business models with Paris Agreement targets to manage global warming.

American companies BlackRock, Vanguard, State Street, JPMorgan, Morgan Stanley, Goldman Sachs and TD Bank call on companies to consider climate risks but do not drive behavioural change around climate models nor policy lobbying, while Fidelity Investments and Capital Group appeared to have very limited engagement with companies on climate, the study found.

Companies’ climate engagement performance is closely reflected in their record of voting on shareholder resolutions designed to support the Paris targets. BlackRock and Capital Group voted against 90% of resolutions in 2018, while other U.S. asset managers voted against the majority.

Trillium Asset Management, Hermes Investment Management, Sarasin & Partners, Walden Asset Management and Zevin Asset Management filed 20% of all climate resolutions in 2018, InfluenceMap said.

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