Support for ESG proposals at record low driven by US investors, report shows
Support for shareholder proposals aimed at tackling environmental and social risks hit a record low last year, figures show, amid a “worrying retreat” by investors, particularly in the US.A report compiled by the responsible investment campaign group ShareAction found that, out of 279 environmental, social and governance (ESG) shareholder resolutions put forward at annual general meetings last year in the UK, Europe and the US, only four – or 1.4% – secured majority support.It marks a sharp decline from recent years, having dropped from 21% in 2021 to 14% in 2022, and 3% in 2023.However, it also reflects a severe drop in support for ESG issues in the US, where rightwing activists and politicians have targeted financial firms for supporting climate and diversity policies.
Policymakers in Donald Trump’s administration are encouraging a retreat from environmental policies, in favour of support for oil and gas production.The shift has prompted six of the largest banks in the US – Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – to withdraw from the UN-sponsored net-zero banking alliance in recent weeks.Trump has also used executive orders to reverse diversity, equity and inclusion (DEI) policies in the federal government and is trying to apply them to the private sector.Companies including the Google owner, Alphabet and the Facebook owner, Meta, as well as the financial firms Deloitte and Goldman Sachs, have started to roll back their own DEI policies in response.Shareholder resolutions are usually put forward by campaigners and activists trying to force company directors to address issues including their climate impact, potential human rights abuses, diversity and inclusion policies, and executive pay.
While those resolutions are not legally binding, they can put pressure on the board to take action.ShareAction’s Voting Matters report illustrates the growing divide between asset managers on either side of the Atlantic, with those in the UK and Europe supporting 81% of shareholder ESG proposals on average last year, compared with US peers, who supported just 25% of proposals last year.It also highlighted the lack of support by the world’s four largest asset managers: BlackRock, Fidelity Investments, State Street Global Advisors and Vanguard.The firms, which are US-headquartered and together manage $23tn (£18tn) in assets, collectively supported just 7% of shareholder resolutions in 2024.“This is the worst result we’ve seen from asset managers in the six years we’ve been monitoring their voting performance and shows a worrying retreat from ambition when it’s most needed,” said Claudia Gray, head of financial sector research at ShareAction.
“We live in a world where asset managers have a huge impact through the companies they invest in.Many claim to be playing their part in tackling important issues like climate change, yet our report calls into question whether the majority of the world’s wealth is being managed effectively by investment firms,” Gray added.The campaign group claimed that, had asset managers thrown their weight behind shareholder resolutions, they could have helped improve conditions for low-paid workers struggling with the global cost-of-living crisis and driven climate action at a time when the impact of the climate crisis is devastating communities worldwide.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionJust two of the 73 shareholder resolutions focused on climate change received enough shareholder support to pass last year.“At a time when the climate breakdown is already devastating lives around the world – from prolonged droughts to deadly wildfires – the finance sector should be driving urgent environmental action, not slowing it down,” Gray said.
“What’s clear is we need better regulation from policymakers and bold leadership and ambition from decision-makers across the financial sector,”Commenting on the ShareAction report, a spokesperson for Vanguard said: “The Vanguard-advised funds vote with an unwavering focus on the long-term interests of fund investors, in accordance with their published proxy voting policies,”A spokesperson for BlackRock said its voting decisions “are based on the long-term financial interests of our clients,For the 2024 proxy year, we found that most environmental and social shareholder proposals were overreaching, lacked economic merit, or were unlikely to promote long-term shareholder value,” It noted that clients had the power to cast votes themselves, including in favour of shareholder resolutions.
Fidelity Investments and State Street were contacted for comment.
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