19 December 2023 – Asset managers are talking a good game on climate but failing to translate their words into action when they vote at annual general meetings (AGMs), according to a new analysis of votes at 75 fossil fuel companies in 2023(1). Reclaim Finance found that engagement on climate was cosmetic at best, with asset managers failing to consider climate in key strategy votes. Reclaim Finance is urging asset managers to up their game ahead of the 2024 AGMs basing their voting decisions on whether companies have comprehensive climate plans aligned with a 1.5°C scenario.
Reclaim Finance assessed the policies and practice of 30 asset managers at the 2023 AGMs of 75 fossil fuel companies in their portfolios. Their votes on Say on Climate, climate-related shareholder resolutions, re-election of board members, remuneration and financial statements were all assessed as well as proxy voting policies. While almost all of the asset managers had committed to engage on climate issues by joining the Climate Action 100+ investor coalition (2), an analysis of their voting policies and practice in 2023 showed that all continued to support companies’ fossil fuel expansion plans.
Asset managers talk a good game when it comes to climate engagement, but when it comes to walking the talk, they seem to have forgotten the aim of the game. By voting to support these developers’ fossil fuel expansion strategies, they are contributing to climate disruption. Asset managers must oppose companies developing climate-damaging fossil fuel projects and vote accordingly at forthcoming AGMs.
Agathe Masson, Stewardship Campaigner at Reclaim Finance
The analysis found that asset managers made very limited efforts to engage fossil fuel companies on climate issues at the 2023 AGMs. They have weak expectations for companies, prioritising disclosure indicators over concrete climate action in their proxy voting policies. What is more they are failing to look beyond specific climate votes – which were held at just 15% of the companies analysed. Very few of them used routine management-proposed votes to engage fossil fuel companies, even though they are a crucial lever for shaping companies’ strategy and governance.
Eleven of the asset managers assessed have no climate-related expectations when voting on the re-election of directors. As a result, on average, the asset managers assessed voted in favour of 78% of director re-elections at the companies analysed, rather than holding them being accountable for their climate-hostile strategies. Asset managers’ approach regarding votes on financial statements is even worse. Only three asset managers expect companies to integrate climate-related risks into financial statements, even though fossil fuel companies present a high risk of stranded assets.
When it came to specific climate votes, results are just as disastrous. Only 9% of climate-related shareholder proposals filed at fossil fuel developers’ AGMs were approved in 2023, and the only 2 fossil fuel companies that organised a vote on their climate strategy (TotalEnergies and Shell) received support from more than 80% of their shareholders. Reclaim Finance also found that several asset managers, including Amundi, BNP Paribas Asset Management and UBS Asset Management, showed inconsistent approaches on climate votes (3).
Reclaim Finance is calling on asset managers to use management-proposed votes to oppose inadequate, unclear or incomplete climate strategies. They should adopt robust voting policies and base voting decisions on whether companies’ climate strategies are comprehensive and aligned with a 1.5°C scenario with low or no overshoot. Asset owners should actively engage with asset managers to encourage them to adopt robust climate-related voting policies and practices.
