Big US asset managers cool on climate issues -think tank

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NEW YORK (Reuters) – Large U.S.-based asset managers have shown waning interest in encouraging companies in which they invest to phase out fossil fuels since 2021, while their European counterparts have remained more active, think tank InfluenceMap said on Monday.

Managers globally hold almost three times more equity in fossil fuel companies than in green investments and have not made significant progress toward commonly agreed goals such as cutting carbon emissions to net zero by 2050, the report said.

North American managers’ support for climate resolutions at large or high-emitting companies that were not backed by management and that aimed to limit global temperature rises in line with the Paris Agreement dropped to 36% at shareholder meetings in 2022 from 50% in 2021, while European groups supported 76% of resolutions of that kind, InfluenceMap said.

The researchers did not look for the cause of the shift, but noted it coincided with moves by Republican state governors to discourage investing using environmental, social and governance (ESG) principles, which have prompted some on Wall Street to spend less time talking openly about issues such as climate change.

Focusing on the world’s four largest asset managers, InfluenceMap said Vanguard and Fidelity Investments supported 4.5% and 4.8% respectively of resolutions the think tank describes as “climate-relevant” in 2022. BlackRock (NYSE:BLK) voted for 12% and State Street (NYSE:STT) 15%, the researchers said.

In response to the report, State Street said it would continue to engage with companies on material risks and opportunities. Fidelity did not immediately comment.

BlackRock said in its own April 2023 report that it had seen environmental shareholder proposals – some of which sought to “micromanage” companies – increase in 2022, and did not support some of them even if it agreed with the issue in focus.

Vanguard said in its report that it had observed more prescriptive proposals and was unlikely to support any that “undermine a board’s latitude”.

InfluenceMap program manager Daan Van Acker mentioned Vanguard’s decision to leave a major industry initiative aimed at tackling climate change last year.

“This example and others, like the asset managers’ drop in climate resolution support, do raise serious questions around the managers’ net-zero commitments in the context of the current political climate,” he said.