Morningstar’s director of investment stewardship research, Lindsay Steward, published an article on how three of the world’s largest asset managers, BlackRock, State Street, and Vanguard, exercise their ESG proxy votes. These firms, collectively managing trillions of dollars in assets, have a significant influence on corporate decision-making and play a crucial role in promoting sustainable practices. There is lots of interesting data in the full article (click here), but these are what we believe are the main points:
- Varying Approaches: While BlackRock, State Street, and Vanguard share a common goal of promoting sustainable investing, they differ in their approaches. BlackRock, for instance, emphasizes engagement and dialogue with companies to drive change, whereas State Street takes a more assertive stance, often voting against management on ESG-related issues. Vanguard, on the other hand, prefers private engagements with companies rather than public voting.
- Vanguard is tougher on ESG proposals: “BlackRock and State Street supported a slight majority of the 100 proposals (55 and 60, respectively), as the chart below shows. Vanguard opposed almost three fourths (72) of them.”
- Influence on Board Composition: The three asset managers have actively used their voting power to promote diversity and independence. They have supported resolutions that enhance board diversity and hold directors accountable for their actions, fostering a more inclusive corporate environment.
- Climate Change as a Top Priority: Climate change is a key area of focus for all three firms. They have increasingly supported shareholder resolutions related to climate risk, urging companies to disclose their strategies and take concrete steps to mitigate environmental impact.
- Different preferred ESG topics:
- “Vanguard voted “Against” all 11 resolutions requesting civil rights audits or racial equity audits. It also voted “Against” all six environment-related resolutions addressing issues other than climate. BlackRock and Vanguard supported more than two thirds of the resolutions addressing both topics.
- State Street’s support for the 13 resolutions on human rights and ethical use of technology, at 92%, was considerably higher than that of BlackRock and Vanguard (31% and 7%, respectively).
- BlackRock showed the highest support among the three firms for civil rights and racial equity resolutions (73%) and those on workplace equity (69%).”
BlackRock, State Street, and Vanguard have emerged as influential advocates for sustainable investing through their voting practices. Their commitment to ESG integration, climate action, and corporate governance has the potential to shape the future of the investment landscape. For end investors, understanding how these asset managers tend to manage their ESG voting, might be a deciding factor for selecting where to put their money (both in terms of ESG commitment, and in terms of the specific topics that are more or less supported by each institution).
I hope you found this interesting. As usual, if there is anything we can help you with, or if there is an ESG topic you would like to know more about, please let us know.
CEO, Miranda ESG
Contacts at Miranda Partners