Fund managers lacking on climate engagement

The portfolios of the world’s 30 largest fund managers, which collectively hold $50 trillion in assets, continue to be misaligned with the goals of the Paris Agreement and require urgent action to drive change in key climate-risk sectors, a report by think tank InfluenceMap has found.

The report scored companies based on three criteria: engagement with investee companies, support for climate-related shareholder resolutions, and portfolio analysis.

The research revealed mixed results on engagement with investee companies to speed up the transition of business models and lobbying practices, with large US groups significantly lagging European competitors.

Legal & General Investment Management and the asset management arms of BNP Paribas and UBS all scored within the A grade.

The world’s largest asset manager, BlackRock, recorded an improvement in its engagement score to B-, up from C+ a year ago. That put it ahead of its next biggest US competitors Vanguard (C), Fidelity Investments (D), and State Street Global Advisors (B-).

Yet the top four US-based companies scored poorly on support for crucial, market guiding climate-related shareholder resolutions in 2020. BlackRock voted in favour of only 24% of such resolutions, while Vanguard, Fidelity Investments and State Street Global Advisors supported 21%, 23% and 50%, respectively.

However, overall support for climate-related resolutions increased during the 2020 proxy season at 62%, compared with 39% in 2019 and 56% in 2018.

Dylan Tanner, Executive Director at InfluenceMap, said: “Given the huge influence these asset managers have over the global economy, it is vital they take action to ensure the world can meet the climate goals of the Paris Agreement.”

“However, this latest report shows most asset managers are still moving too slowly when it comes to using their clout to drive change in investee companies,” he added.