The power of proxy voting to transform corporate behavior is real. Through the height of the 2019 proxy voting season, shareholders had the opportunity—and responsibility—to vote on 177 shareholder resolutions addressing environmental and social issues and sustainable governance. Boston Trust Walden takes this fiduciary responsibility seriously, striving to vote on all company and shareholder proposals presented in proxy statements. Our multi-year initiative to hold asset managers we invest in accountable for thoughtfully incorporating long-term ESG considerations in their proxy voting practices remains an engagement priority.
In the 2020 proxy season alone, we have engaged eight companies, among them some of the largest global investment firms, such as BlackRock, JPMorgan Chase, and Vanguard Group, where we filed shareholder resolutions seeking a review of 2019 proxy voting practices on proposals addressing climate change. Our goal is to encourage better alignment between stated corporate policy and actual proxy voting practices. While these engagement initiatives previously fostered positive changes in written proxy voting policies and practices, the firms’ actual voting records too often have contradicted their public statements on the urgency and financial materiality of climate change. In 2019, BlackRock supported just 12 percent of climate-related shareholder proposals, while JPMorgan Chase and Vanguard Group supported just 10 percent.
In contrast, firms such as BNP Paribas, DWS Group, and Legal & General Investment Management each supported over 95 percent of climate-related shareholder proposals in 2019, emerging as leaders among major global asset managers seeking to reconcile established climate science with the responsibilities of a fiduciary.
Thus far, the responses to our proposals have been mixed. BlackRock CEO Larry Fink recently issued his 2020 Letters to CEOs and Clients, outlining the investment firm’s evolving consideration of climate risk within investment strategies and active ownership. In an accompanying commentary on BlackRock’s engagement on climate risk, the Investment Stewardship team announced that it will vote against directors, or in favor of appropriate shareholder proposals, when a company has failed to provide adequate climate-related disclosure or created a clear plan for managing long-term climate risk in line with the recommendations of the Paris Climate Agreement. It is yet to be seen how BlackRock’s 2020 proxy voting record will change, but concerned investors and clients plan to hold BlackRock accountable.
Our engagements with JPMorgan Chase and Vanguard Group have yet to produce desired results. JPMorgan Chase challenged our proposal with the SEC, and Vanguard Group has been slow to come to the table to discuss our concerns. Both continue to defend their climate change voting records as acceptable.
Major asset managers have a fiduciary responsibility to utilize their proxy voting power to support meaningful corporate action and better shield portfolios from systemic climate risk by supporting meaningful corporate action. As investors, companies, and communities are already feeling the financial and physical impacts of the climate crisis, the time to match rhetoric with record is now.
Timothy Smith
Director of ESG Shareowner Engagement, Boston Trust Walden
Jared Fernandez
ESG Research Analyst, Boston Trust Walden