DOCSLIB.ORG

How Asset Manager Voting Shaped Corporate Climate Action in 2019

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
How Asset Manager Voting Shaped Corporate Climate Action in 2019 CLIMATE IN THE BOARDROOM: HOW ASSET MANAGER VOTING SHAPED CORPORATE CLIMATE ACTION IN 2019 This report was made possible by the generous support of the Nathan Cummings Foundation, Partners for a New Economy, the Silberstein Foundation, and the Sunrise Project. This report was made possible by the generous support of the Nathan Cummings Foundation, Partners for a New Economy, the Silberstein Foundation, and the Sunrise Project. The information in this report has been prepared from sources and data the authors believe to be reliable, but we assume no liability for and make no guarantee as to its adequacy, accuracy, timeliness, or complete- ness. The information in this report is not designed to be investment advice regarding any security, company, industry, or fund, and should not be relied upon to make investment decisions. No information herein is intended as an offer, or solicitation of an offer, to sell or buy, or as a sponsorship of any company, security, fund, or product. Opinions expressed and facts stated herein are subject to change without notice. This study uses data obtained under license from Morningstar © on September 6, 2019. © 2019 Morningstar, All Rights Reserved. The data obtained under license: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Climate in the Boardroom 2 Table of Contents I. Executive Summary . 4 II. Introduction: Energy and Utility Companies are Not on Track to Achieve the Goals of the 2015 Paris Climate Agreement . 6 Shareholder Voting is the Key to Achieving Climate-Competent Boards of Directors and Aligning Executive Incentives to Climate Targets . 8 Largest Shareholders Bear Greatest Responsibility to Push for Corporate Climate Action. 9 Note on Data and Methods . 10 III. Asset Managers Voting with Corporate Management on Director and Say-on-Pay Votes. 12 BlackRock and Vanguard Voted in Favor of the Management-Backed Directors in Climate-Critical Industries More Often Than They Did Overall . 13 Progress in 2019: Asset Managers Taking Action on Director and Management Accountability . 14 Case Study: Vote against Board Members at ExxonMobil . 14 IV. Performance of Asset Managers on Key Climate Shareholder Resolutions in 2019 . 16 Resolutions Directly Related to Climate Risks . 18 Resolutions on Policy Influence at Fossil Fuel Intensive and Climate-Critical Companies . 19 Resolutions on Governance Reforms at Fossil Fuel Intensive and Climate-Critical Companies . 20 Asset Manager Votes on U.S. Resolutions Backed by the Climate Action 100+ . 21 V. Key Climate-Related Shareholder Resolutions Would Have Passed with BlackRock and Vanguard Support . 23 Key Climate Risk Votes . 24 Key Lobbying and Political Spending Disclosure Votes . 25 Key Governance Votes . 26 VI. What Is Driving The Largest Asset Managers To Vote with Management? . 29 Structural Conflicts of Interest . 29 Greenwashing “Engagement” . 29 VII. Recommendations . 31 Asset Owners . 31 Policymakers . 31 Appendices . 33 Appendix A: List of Asset Managers from Investments and Pensions Europe . 33 Appendix B: S&P 500 Utilities and Oil and Gas Companies . 34 Appendix C: List of Climate-Critical Resolutions, 2019 . 36 Appendix D: Note on Estimating Voting Power of Asset Managers . 37 Climate in the Boardroom 3 I. Executive Summary In October of 2018, the United Nations Intergovernmen- ments and retirement savings for millions of people in tal Panel on Climate Change (IPCC) established that the the U.S. and abroad, they are responsible for serving as global economy must nearly halve carbon emissions stewards for the interests of long-term investors of all over the next decade and reach net-zero emissions sizes. This report measures how these asset managers by 2050 to have just a 50 percent chance of limiting voted on director elections and advisory votes on top warming to 1.5°C. Failure to do so would exacerbate our executive compensation (also known as “say on pay” global climate crisis, decimating ecosystems, under- votes) at large-capitalization U.S. energy and utility mining social and political systems, and creating large, companies, as well as their performance on critical negative, and undiversifiable risks to investor portfolios climate-related shareholder proposals at these and worldwide. Unfortunately, the largest companies in other companies in the S&P 500. the fossil fuel intensive U.S. energy and utility sectors remain far behind in transforming their businesses to The key findings of this review include: our net-zero carbon future. • BlackRock and Vanguard voted for 99% of U.S. The shareholders that own these companies are in a energy and utility company-proposed directors and position to ensure that corporate directors are setting 100% of their say on pay proposals. BlackRock and clear emissions targets aligned with the goals of the Vanguard not only voted with management more Paris Agreement and disclosing their plans to achieve often than most of their asset manager peers; they them, that executive compensation plans are aligned were also more likely to support management at to those targets, and that company management does these fossil fuel intensive companies than they did not use shareholder resources to undermine responsi- across U.S. equities overall. ble climate policy in service of their short-term interests. Given both the urgency of the transformation required • BlackRock and Vanguard voted overwhelmingly and the influence provided by their holdings in these against the climate-critical resolutions reviewed in companies, leading investors worldwide are mobilizing this report, with BlackRock supporting just five of to hold the largest emitters accountable to the urgent the 41, and Vanguard only four. At least 16 of these need to decarbonize. Despite this, BlackRock and critical climate votes would have received majority Vanguard, the world’s largest asset managers, continue support of voting shareholders if these two largest to undermine global investor efforts to promote respon- asset managers had voted in favor of them. sible climate action at these critical companies. These included proposals that would have held ExxonMobil’s board accountable for failure to This report reviews the contributions, or lack thereof, of engage responsibly on climate change, and brought the world’s 25 largest asset managers to hold large U.S. much-needed transparency to the lobbying efforts energy and utility companies accountable to combat of Duke Energy, the largest, highest emitting, and climate change and the risks it poses to long-term highest coal-using electric utility in the United States. shareholders and other stakeholders. With increasing concentration in the investment industry, these 25 firms • BlackRock and Vanguard both voted against all collectively manage over $38 trillion and account for of the U.S. shareholder proposals backed by the over 51% of the assets managed by the 400 largest $34 trillion Climate Action 100+ investor coalition, asset managers worldwide. As managers of invest- undermining the largest global investor efforts for Climate in the Boardroom 4 accountability and transparency in the energy and resolving issues, voting on directors, executive com- automotive sectors. pensation, and shareholder resolutions is a far stronger tool for long-term shareholders to communicate the • In contrast, other large asset managers are choosing strength and urgency of their position when companies to set and enforce policies to hold corporate boards are not yet aligning their strategies to ambitious decar- accountable if climate-related concerns are not bonization goals. Falling support for these directors and adequately addressed. Legal & General Investment compensation arrangements – along with passage of Management, BNP Paribas Asset Management, these critical climate-related shareholder resolutions PIMCO, and Standard Life Aberdeen had the highest – would have sent an unmistakable signal to fossil fuel rate of voting against management proposed intensive companies that leading investors would no director candidates and say on pay proposals in the longer tolerate business-as-usual on climate change. oil and gas and utility industries. Legal & General, Instead, market leaders BlackRock and Vanguard BNP Paribas, and PIMCO also supported over 95% of chose to shield management from accountability, serv- the shareholder proposals analyzed in this study, as ing as a blockade for global investor action on climate. did DWS Group, voting in favor of improved emis- sions disclosures and reduction plans, transparency This report recommends that asset owners closely regarding corporate political influence activity, and examine the engagement and proxy voting activities of governance reforms to improve accountability to the asset managers they engage, call the asset manag- long-term shareholders. ers they hire to account for inadequate voting policies and practices, and consider those activities when In response to growing criticism of their voting behavior, evaluating and selecting asset managers. In addition, BlackRock and Vanguard have recently emphasized this report recommends that policymakers consider the increasing number of engagements they are having reforms to ensure transparency, regulate conflicts of with portfolio companies.
Load more

Recommended publications
  • The Pulitzer Prizes 2020 Winne
    WINNERS AND FINALISTS 1917 TO PRESENT TABLE OF CONTENTS Excerpts from the Plan of Award ..............................................................2 PULITZER PRIZES IN JOURNALISM Public Service ...........................................................................................6 Reporting ...............................................................................................24 Local Reporting .....................................................................................27 Local Reporting, Edition Time ..............................................................32 Local General or Spot News Reporting ..................................................33 General News Reporting ........................................................................36 Spot News Reporting ............................................................................38 Breaking News Reporting .....................................................................39 Local Reporting, No Edition Time .......................................................45 Local Investigative or Specialized Reporting .........................................47 Investigative Reporting ..........................................................................50 Explanatory Journalism .........................................................................61 Explanatory Reporting ...........................................................................64 Specialized Reporting .............................................................................70
    [Show full text]
  • Tampa Bay Times Pulitzer Prize Winning Advocacy of Fluoridation
    Tampa Bay Times Pulitzer Prize Winning Advocacy of Fluoridation Page Date Byline 2 03/17/2012 Reverse the decay of common sense 5 04/19/2012 Another City Steps Up for Dental Health 6 08/04/2012 Paying for Fluoride Four's foolishness 8 08/21/2012 Scott picks ideology over residents' health 10 09/20/2012 Brickfield strays from fluoride facts to defend his vote 12 10/12/2012 Bring Pinellas Commission Back to Mainstream 15 10/31/2012 The real cost of the fluoride fiasco 17 11/07/2012 Facts over fear in Pinellas commission races 18 11/27/2012 Welcome reversal on fluoride 20 02/28/2013 Scientific sense and fluoride 22 03/14/2013 Times' Tim Nickens wins Walker Stone Award for editorials 23 04/15/2013 Pulitzer, finalists are source of pride for Poynter 26 04/15/2013 Pulitzers Awarded to Times, Journal 29 04/15/2013 Tampa Bay Times wins Pulitzer, reacts to announcement 31 04/15/2013 Times' Tim Nickens, Daniel Ruth win Pulitzer Prize for editorial writing 34 04/15/2013 Times' winning Pulitzer Prize entry for Editorial Writing Reverse the decay of common sense | Tampa Bay Times 5/18/13 1:35 PM A Times Editorial Reverse the decay of common sense Saturday, March 17, 2012 4:30am This is a defining moment for Pinellas County, where Midwestern sensibilities run deep and extremism usually fails. It's been nearly three months since the county stopped putting fluoride in its drinking water. The reason: Four county commissioners sided with a handful of tea party followers, conspiracy theorists and a tiny antifluoride group misnamed Citizens for Safe Water.
    [Show full text]
  • Fracking by the Numbers
    Fracking by the Numbers The Damage to Our Water, Land and Climate from a Decade of Dirty Drilling Fracking by the Numbers The Damage to Our Water, Land and Climate from a Decade of Dirty Drilling Written by: Elizabeth Ridlington and Kim Norman Frontier Group Rachel Richardson Environment America Research & Policy Center April 2016 Acknowledgments Environment America Research & Policy Center sincerely thanks Amy Mall, Senior Policy Analyst, Land & Wildlife Program, Natural Resources Defense Council; Courtney Bernhardt, Senior Research Analyst, Environmental Integrity Project; and Professor Anthony Ingraffea of Cornell University for their review of drafts of this document, as well as their insights and suggestions. Frontier Group interns Dana Bradley and Danielle Elefritz provided valuable research assistance. Our appreciation goes to Jeff Inglis for data assistance. Thanks also to Tony Dutzik and Gideon Weissman of Frontier Group for editorial help. We also are grateful to the many state agency staff who answered our numerous questions and requests for data. Many of them are listed by name in the methodology. The authors bear responsibility for any factual errors. The recommendations are those of Environment America Research & Policy Center. The views expressed in this report are those of the authors and do not necessarily reflect the views of our funders or those who provided review. 2016 Environment America Research & Policy Center. Some Rights Reserved. This work is licensed under a Creative Commons Attribution Non-Commercial No Derivatives 3.0 Unported License. To view the terms of this license, visit creativecommons.org/licenses/by-nc-nd/3.0. Environment America Research & Policy Center is a 501(c)(3) organization.
    [Show full text]
  • Minimized the Strategic National Stockpile: the $5.3 Trillion Question for Pandemic Preparedness Raised by the Ventilator Fiasco †
    How “Maximizing Shareholder Value” Minimized the Strategic National Stockpile: The $5.3 Trillion Question for Pandemic Preparedness Raised by the Ventilator Fiasco † William Lazonick and Matt Hopkins* Working Paper No. 127 July 21st, 2020 ABSTRACT With just 4.2 percent of the world’s population, the United States had, as of July 21, 2020, 26.0 percent of its confirmed Covid-19 cases and 23.1 percent of its deaths. The magnitude of the tragedy raises the critically important counterfactual question of how the United States as a nation would have fared had there been competent and committed political leadership in place when, during January 2020, intelligence indicating the severity of the unfolding pandemic became available. A partial answer to this question lies in identifying the organizational and technological capabilities to develop, produce, and deliver “countermeasures”—personal protective equipment (PPE), ventilators, diagnostic tests, therapies, and vaccines—that a prepared federal administration would have been able to mobilize to respond to the pandemic. Main repositories of the necessary † The Institute for New Economic Thinking provided the main funding for this research. Additional support to William Lazonick came from the Open Society Foundations and Canadian Institute for Advanced Research, and to Matt Hopkins from his PhD scholarship as SOAS University of London. We acknowledge comments of Tom Ferguson and Ken Jacobson on previous drafts of this essay. * The Academic-Industry Research Network. Corresponding author: William Lazonick at [email protected]. Lazonick and Hopkins capabilities are government agencies and business firms, with the development, production, and delivery of countermeasures heavily reliant on government-business collaborations (GBCs).
    [Show full text]
  • Lies, Incorporated
    Ari Rabin-Havt and Media Matters for America Lies, Incorporated Ari Rabin-Havt is host of The Agenda, a national radio show airing Monday through Friday on SiriusXM. His writing has been featured in USA Today, The New Republic, The Nation, The New York Observer, Salon, and The American Prospect, and he has appeared on MSNBC, CNBC, Al Jazeera, and HuffPost Live. Along with David Brock, he coauthored The Fox Effect: How Roger Ailes Turned a Network into a Propaganda Machine and The Benghazi Hoax. He previously served as executive vice president of Media Matters for America and as an adviser to Senate Democratic Leader Harry Reid and former vice president Al Gore. Media Matters for America is a Web-based, not-for-profit, progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media. ALSO AVAILABLE FROM ANCHOR BOOKS Free Ride: John McCain and the Media by David Brock and Paul Waldman The Fox Effect: How Roger Ailes Turned a Network into a Propaganda Machine by David Brock, Ari Rabin-Havt, and Media Matters for America AN ANCHOR BOOKS ORIGINAL, APRIL 2016 Copyright © 2016 by Ari Rabin-Havt and Media Matters for America All rights reserved. Published in the United States by Anchor Books, a division of Penguin Random House LLC, New York, and distributed in Canada by Random House of Canada, a division of Penguin Random House Canada Limited, Toronto. Anchor Books and colophon are registered trademarks of Penguin Random House LLC. Reinhart-Rogoff chart on this page created by Jared Bernstein for jaredbernsteinblog.com.
    [Show full text]
  • Tampa Bay Times Pulitzer Prize Winning Advocacy of Fluoridation
    The Tampa Bay Times won its ninth Pulitzer Prize on Monday for a series of editorials last year by Tim Nickens and Daniel Ruth after the Pinellas County Commission moved to stop putting fluoride in the drinking water, affecting the dental health of 700,000 people in the county. As Nickens and Ruth wrote in the last of the 10 editorials submitted for the Pulitzer Prize in Editorial Writing, "It took nearly 14 months, an election and the clarion voice of Pinellas County voters to persuade county commissioners to correct a serious error in judgment." And the newly reconstituted commission quickly moved to vote to restore fluoride to the water system. Here is the Pulitzer nominating letter from Times Editor Neil Brown, with links to the 10 editorials. To the judges: In October 2011, the Pinellas County Commission turned back the clock. The commission, pressured by antifluoride zealots and tea party conservatives, abruptly voted to stop adding fluoride to the drinking water. The commissioners ignored established science and the public health, and in January 2012 the Pinellas water system suddenly became one of the nation’s largest without fluoridated water. More than 700,000 residents no longer benefited from what the Centers for Disease Control and Prevention calls one of the nation’s greatest health care advances. The Tampa Bay Times editorial board went on mission to correct this travesty. With original reporting and persuasive arguments, Tim Nickens and Dan Ruth educated readers and delivered a clarion call for action on behalf of those who need fluoridated water the most: the poor families and the children of Pinellas County.
    [Show full text]
  • Exxon Researched Climate Change in 1977
    Supplemental Items 1. N/A Reporting Team Bios 2. Various 39 Internal Exxon Documents We Published http://insideclimatenews.org/search_documents?topic=All&project=&keywords= &field_related_project=41124 3. Sept. 16, 2015 FRONTLINE: Exxon Researched Climate Change in 1977 http://insideclimatenews.org/news/15092015/frontline-video 4. Nov. 8, 2015 Doonesbury Comic Strip http://doonesbury.washingtonpost.com/strip/archive/2015/11/08 5. Various Exxon: The Road Not Taken (Related Stories) http://insideclimatenews.org/exxon-road-not-take-related-stories Team NEELA BANERJEE SENIOR REPORTER, WASHINGTON, D.C. InsideClimate News [email protected] 202-297-9915 Neela Banerjee is a Washington-based reporter for Inside Climate News. Before joining ICN, she spent four years as the energy and environmental reporter for the Los Angeles Times’ Washington bureau. Banerjee covered global energy, the Iraq War and other issues with The New York Times. She also served as a Moscow correspondent with The Wall Street Journal. Ms. Banerjee graduated from Yale University. JOHN H. CUSHMAN JR. SENIOR EDITOR AND REPORTER, NEW JERSEY InsideClimate News [email protected] 301-642-6571 Jack Cushman is an editor and reporter for InsideClimate News. Before joining ICN, he worked for 35 years as a writer and editor in Washington, D.C., principally with the Washington bureau of The New York Times. Cushman has written extensively about energy, the environment, industry and military affairs, also covering financial and transportation beats, and editing articles across the full spectrum of national and international policy. He served on the board of governors of the National Press Club and was its president in the year 2000.
    [Show full text]
  • Index Fund Enforcement
    Index Fund Enforcement Alexander I. Platt* Corporate America today is astonishingly beholden to three large financial institutions: BlackRock, Vanguard, and State Street Global Advisors. As investors have moved their money into low-cost, highly diversified investment vehicles known as index funds, the so-called “Big Three” institutional fund managers that dominate the index fund industry have grown rapidly and accumulated unprecedented economic power and influence. For instance, these three institutions now vote one out of every four shares of stock issued by large U.S. companies. Policymakers and scholars have begun to sound the alarm about this concentration of corporate ownership, and have proposed reforms to reduce or eliminate these institutions’ influence over portfolio companies. But concentrated power has its benefits, too. In this Article, I argue that the remarkable size, permanence, and cross-market scope of the Big Three’s ownership stakes gives them the capacity and, in some cases, the incentive to punish and deter fraud and misconduct by portfolio companies. Corporate governance and securities regulation scholars have argued that these institutions have generally overriding incentives to refrain from meaningful corporate stewardship, but the facts on the ground tell a somewhat different story. Drawing on a comprehensive review of the Big Three’s enforcement activities and interviews with key decision-makers for these institutions, I show how they have been using engagement, voting, and * Copyright © 2020 Alexander I. Platt.
    [Show full text]
  • Do Shareholders Have the Power? Climate Change As a Material Risk
    Do Shareholders Have the Power? Climate Change as a Material Risk Chandler Farnworth* I. INTRODUCTION ................................................................................. 150 II. THE RELATIONSHIP BETWEEN A CORPORATION AND ITS SHAREHOLDERS ................................................................................ 151 A. Corporate Social Responsibility ....................................... 151 B. The Problem of Greenwashing ......................................... 152 III. THE ISSUE OF MATERIALITY AND DISCLOSURE .............................. 154 A. When Is Disclosure Required? ......................................... 154 B. What Is Material? ............................................................. 154 IV. AN ANALYSIS OF THE MOST RECENT SHAREHOLDER SUITS .......... 156 A. Commonwealth of Massachusetts v. Exxon Mobil Corp. ................................................................................. 157 1. ExxonMobil’s Fossil Fuel Business and History of Climate Deception ..................................................... 158 2. ExxonMobil Is Deceiving Investors by Failing to Disclose Risks of Climate Change ................................ 159 3. Massachusetts’ Investors Have a Strong Interest in Accurate Disclosure of the Material Risks of the Corporation’s Business Practices .................................. 160 4. ExxonMobil Misleads Consumers Through Deceptive Advertisements and Greenwashing ............. 161 5. ExxonMobil’s Response to the Lawsuit and Recent Developments ...................................................
    [Show full text]
  • Need to Put Header/Logo In
    EDITOR'S NOTE IN THIS ISSUE: Greetings Friends and Colleagues, EDITOR’S NOTE It's been a long winter here in Maine, but there are signs of spring EDITOR’S CHOICE appearing that make me hopeful and eager for the warmer days NATIONAL NEWS ahead. Every morning I walk my dog Alice through our neighborhood and in the last two weeks the number of birds that are out and about STATE NEWS and serenading us along our path has noticeably increased. We can WETLAND SCIENCE NEWS actually see pavement again and, even more exciting for Alice, we are beginning to see some grass and dirt. This, of course, is terribly RESOURCES & PUBLICATIONS exciting for a creature with more than 220 million olfactory receptors in her big schnozzle - it's like finding buried POTPOURRI treasure. CALENDAR OF EVENTS Of course with the melting of the INDEX snow, also comes the barrage of neighborhood Facebook postings complaining about all the "gifts" left behind by less responsible To view the March issue of dog owners that are now Wetland Breaking News as well appearing after being buried in as past issues on our website, snow throughout the winter season. It really is kind of gross, please click here. not to mention a terrible source of water contamination Visit ASWM online to read which can spread diseases like weekly news updates between Giardia, Salmonella and issues. Campylobacter to mention a few. I've been thinking about putting up a sign like the Chicago Park Please send comments and District at both ends of our neighborhood to see if it has an effect.
    [Show full text]
  • Pulitzer Prize Winners and Finalists
    WINNERS AND FINALISTS 1917 TO PRESENT TABLE OF CONTENTS Excerpts from the Plan of Award ..............................................................2 PULITZER PRIZES IN JOURNALISM Public Service ...........................................................................................6 Reporting ...............................................................................................24 Local Reporting .....................................................................................27 Local Reporting, Edition Time ..............................................................32 Local General or Spot News Reporting ..................................................33 General News Reporting ........................................................................36 Spot News Reporting ............................................................................38 Breaking News Reporting .....................................................................39 Local Reporting, No Edition Time .......................................................45 Local Investigative or Specialized Reporting .........................................47 Investigative Reporting ..........................................................................50 Explanatory Journalism .........................................................................61 Explanatory Reporting ...........................................................................64 Specialized Reporting .............................................................................70
    [Show full text]
  • A Climate Chronology Sharon S
    Landscape of Change by Jill Pelto A Climate Chronology Sharon S. Tisher, J.D. School of Economics and Honors College University of Maine http://umaine.edu/soe/faculty-and-staff/tisher Copyright © 2021 All Rights Reserved Sharon S. Tisher Foreword to A Climate Chronology Dr. Sean Birkel, Research Assistant Professor & Maine State Climatologist Climate Change Institute School of Earth and Climate Sciences University of Maine March 12, 2021 The Industrial Revolution brought unprecedented innovation, manufacturing efficiency, and human progress, ultimately shaping the energy-intensive technological world that we live in today. But for all its merits, this transformation of human economies also set the stage for looming multi-generational environmental challenges associated with pollution, energy production from fossil fuels, and the development of nuclear weapons – all on a previously unimaginable global scale. More than a century of painstaking scientific research has shown that Earth’s atmosphere and oceans are warming as a result of human activity, primarily through the combustion of fossil fuels (e.g., oil, coal, and natural gas) with the attendant atmospheric emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and other * greenhouse gases. Emissions of co-pollutants, such as nitrogen oxides (NOx), toxic metals, and volatile organic compounds, also degrade air quality and cause adverse human health impacts. Warming from greenhouse-gas emissions is amplified through feedbacks associated with water vapor, snow and sea-ice
    [Show full text]