The fifth annual study of Mutual Fund proxy voting on climate change from CERES shows a continuing upward trend in the number of fund families voting for climate-related proxies. The growth has been steady and impressive over the five years the study has been conducted, indicating that a growing number of asset managers are taking seriously the potential impact of climate change on the value of their customers’ investments.
CERES, a network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges, has been a leader in persuading investment managers that sustainability issues have a significant impact on investment value and mobilizing them to address the issue.
Given that US mutual fund firms hold about $11 trillion in assets[1] and that those holdings include about 1/4 of the stock of all publicly-traded US companies[2], their decisions on sustainability-related proxy resolutions are important.
While the number of firms supporting over 50% of the climate-related proxy resolutions is still a distinct minority of the firms studied (11 of 46), that number has grown substantially from 3 firms in the first year of the study. The makeup of that growing list is noteworthy, as it includes highly respected firms such as TIAA-CREF, Charles Schwab, Credit Suisse, Oppenheimer and Goldman Sachs.
Oppenheimer is a particularly significant addition as they had until this year not voted for any climate-related resolutions and may be the largest firm, measured by total assets under management (over $107 billion in 2009) to vote for over 50% of the climate resolutions.
The biggest hurdle to continued growth is not the quality of the disclosures themselves, but the prevailing view of climate-related resolutions as being matters that “in the ordinary course of business” should be left to management’s discretion. Given the relatively sorry state of corporate governance that has been demonstrated over the past several years, this position may become increasingly hard to defend as the default position on more than just issues of sustainability.
Another significant development will challenge that default position. Next year’s report will incorporate proxies voted since the SEC issued guidance this past February that firms should disclose potential risks from climate change in their reports. By deeming the impact of climate change a material issue, the SEC is making it more difficult for fund firms to take a pass on climate-related proxy resolutions.
- See the full study on the CERES web site
References:
- ↑ Investment Company Institute statistics .
- ↑ Investment Company Institute Research Report, 2006.