Of the 400 shareholder proposals that requested actions from US portfolio companies on environmental and social (E&S) matters, Vanguard did not support a single one, according to their latest US regional stewardship brief.
For Vanguard, the lack of support for environmental and/or social proposals this year “does not reflect a change in our team’s application of the funds’ voting policies”. Rather, the firm said, in each case, the proposals did not address financially material risks to shareholders at the companies in question, or they were “overly prescriptive” in their requests. This included, for example, proposals calling for specific greenhouse gas (GHG) emissions targets or third-party audits of aspects of portfolio company operations.
Vanguard – which continues to rebuff calls for it to join Climate Action 100+ and pulled out of its participation in the Net Zero Asset Managers initiative in December 2022 – have recently been urged by some of their clients to “centre climate risk as a priority” within its investment and engagement strategies.
Meanwhile, during the 2024 AGM season, BlackRock’s support for E&S proposals dropped to just 4.1% from 6.7% the previous year, with ShareAction’s Felix Nagrawala saying: “If other investors and the largest proxy voting advisors can take a much more progressive approach, why should the world’s largest asset manager be let off the hook?”
Director of stewardship research and policy at Morningstar Sustainalytics, Lindsey Stewart, said although the figures are striking, it probably doesn’t surprise anyone that has been watching asset managers’ voting patterns closely.
“We published research earlier this month – before the firms’ announcements – indicating BlackRock and Vanguard were likely to have continued to cut their support for E&S proposals this year, having already drastically reduced their support in 2023.
“Amid ongoing pushback on all things ESG from more conservative elements of the political spectrum, BlackRock, Vanguard and other large asset management firms have increasingly emphasised a focus on financial materiality and traditional corporate governance. This emphasis has manifested in recent proxy voting decisions that dissent from company boards’ recommendations with increasing rarity; meaning much lower support for shareholder proposals.
“Absent the backing of these large firms’ shareholdings, we’ve seen the number of majority-supported E&S shareholder resolutions (adjusted to exclude votes by shareholders closely connected to the relevant company) shrink drastically: from 64 in the 2022 proxy year to 16 in 2023 and just 13 in 2024.”
