Lip service to greater sustainability and social commitment abounds in the financial industry. However, the number of asset managers who actually take an active shareholder role and advocate ESG resolutions is small. Industry giants in particular keep blocking resolutions. This is what a report from ShareAction shows.
When most people think of ESG investing, they think of excluding companies with environmentally or socially problematic business practices, or those that don't comply with mainstream governance standards. However, ESG investors are increasingly choosing a more active and inclusive approach: active ownership.
Nevertheless, according to the ShareAction report "Voting Matters 2021 many asset managers do not take the opportunity to exercise their voting rights. Also troubling, he said, is that large asset managers in particular have blocked efforts to make social and environmental progress. According to the report, 18 more ESG resolutions could have been adopted if these industry giants had sided with the advocates.
But Nordea Asset Management says it's important for shareholders to be aware of their power, which they can use to help companies improve the management of their environmental, social and governance risks. Active Owership was accordingly an important part of protecting the long-term interests of shareholders and society as a whole. Nordic asset manager has ambition to vote at majority of portfolio company shareholder meetings.
Lack of support for ESG resolutions
However, the ShareAction report does not give the industry a good overall report card. Even for ESG resolutions, an area of growing investor interest, performance was not satisfactory: only 21% of environmental and social resolutions evaluated received more than 50% support last year.
Only three asset managers supported all climate-related resolutions in 2021: Candriam, Impax Asset Management Group and Nordea Asset Management. But the report also shows that members of Climate Action 100+ or the Net Zero Asset Managers Initiative are more supportive of climate-related resolutions 2021 than non-members are.
Even less support received 2021 resolutions focused on social issues. Of these, only 15% were accepted. Among these successful resolutions were, in particular, resolutions aimed at creating more transparency around diversity. In contrast, resolutions calling for changes in corporate behavior were hardly ever adopted.
More transparency thanks to commitment
Active ownership also includes commitment. At ExxonMobil, a group of shareholders including Nordea Asset Management demanded that the oil company show how its direct and indirect lobbying efforts are consistent with the goals of the Paris climate agreement. In March 2021, the proposal was finally approved, leading to greater transparency around ExxonMobil's lobbying activities.