Ethos, the Swiss foundation with a large number of pension funds as members, has called on asset managers to strengthen their stance on sustainability at annual general meetings (AGMs), narrowing the gap between their proxy voting positions, and those of the asset owners.
Asset managers’ votes on sustainability-related items on AGM agendas continue to diverge from the preferences of asset owners, according to a study conducted by Investor Impact Initiative, using Ethos’ voting recommendations on decisions taken at AGMs last year.
A study commissioned by the UK Asset Owner Roundtable late last year came to a similar conclusion, spotting a misalignment between the long-term interests of asset owners and asset manager stewardship processes.
Asset managers last year opted to actively exercise their voting rights in favour of proposals relating to ESG issues, or vote against board members at companies lacking sustainability strategies, only when they followed Ethos’ voting recommendations, according to the Investor Impact Initiative’s study.
Asset managers’ voting inclination on sustainability was assessed through the ‘Voting for Sustainability’ ranking developed by the Investor Impact Initiative, start-up rezonanz, and the ZHAW Center for Global Competitiveness.
It used Ethos’ recommendations as a benchmark on 691 proposals from the 2023 proxy season most closely related to sustainability topics to analyse the voting behaviour of 13 leading asset managers, it added.
Credit Suisse Asset Management ranked first, suggesting that the asset manager actively used voting rights to support sustainability in investee companies, according to the study.
Swisscanto, Swiss Life Asset Management, and Pictet Asset Management ranked second, third and fourth, respectively, while State Street Global Advisors, JP Morgan, and Vanguard came at the bottom of the ranking, with BlackRock taking the last position with a zero score, it added.
This confirms a report published earlier this year by ShareAction which stated that the decline of shareholder support for ESG matters over the last few year has been driven by the ‘big four’ – State Street Global Advisors, Fidelity Investments, BlackRock, and Vanguard.
Vincent Kaufmann, the chief executive officer of the Ethos Foundation, said the ‘Voting for Sustainability’ ranking is “a call to action, an incentive for asset managers to attach greater importance to the exercise of voting rights and to recognise the importance of each vote they cast”.
Ethos also recommends pension funds to continue to engage with asset managers to exercise voting rights in line with the schemes’ principles and wishes, it said.
The ranking will expand to cover further asset managers globally by the end of 2024, according to rezonanz.
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