Mar 12, 2018

Wall Street messaging on climate activism

A new analysis finds that in 2017 the world's largest asset managers often declined to support shareholder resolutions that pushed large power and oil companies to respond more aggressively to climate change risks.

Data: Peterson, et al., 2018, "Asset Managers and Climate-Related Shareholder Proposals: Report on Key Climate Votes", 50/50 Climate Project; Chart: Andrew Witherspoon / Axios

Why it matters: The report arrives as activist investors and their allies are increasingly pushing large energy companies to disclose more about their plans to address climate change. There's a particular focus on pushing companies to model how their business will fare in a hypothetical carbon-constrained world in which emissions are on a trajectory to hold the global temperature increase to two degrees Celsius above preindustrial levels.

The details: Click here to read the full report from the 50/50 Climate Project, a nonprofit group that urges institutional investors to use their leverage on the topic.

  • It tallies the frequency with which 24 of the largest asset managers supported what the 50/50 Climate Project selected as "key" resolutions during the 2017 proxy season.

One big finding: The behavior of big institutional funds matters a lot, as only a few of the biggest asset managers would have been able to affect key climate-reporting proposals at energy and utility companies last year.

  • "If either of the top two asset managers, BlackRock and Vanguard, had voted yes on any of ten or eight key climate proposals, respectively, those proposals would have received a majority of support," it states.

One big question: Whether BlackRock, the world's largest asset manager, will take a more activist stance going forward in light of CEO Larry Fink's recent open letter to companies urging a greater focus on "social purpose."

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Illustration: Sarah Grillo/Axios

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Why it matters: BlackRock has $7 trillion in assets under management, and faces growing activist pressure to use its leverage to hasten the global transition to low-carbon energy.

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Thursday's debate nicely encapsulated the way that climate change has become stitched into the fabric of wider Democratic policy and messaging on many topics.

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Why it matters: Shareholder pressure is becoming an increasingly important driver of corporate decision-making at a time when national governments' political will on climate is uneven at best.

Go deeperArrowDec 17, 2019