Stewardship divergence: US managers scale back support for climate resolutions as Europe doubles down

Shareholder support for ESG and climate resolutions has dropped to a new low during the 2024 AGM season, a trend primarily driven by voting patterns among the world’s largest US-based managers, according to ShareAction’s latest Voting Matters report, which analyses voting patterns across the largest 70 managers worldwide.

Voting patterns are heavily influenced by trends in the US markets, with US managers collectively managing close to $80trn in assets, compared to $34trn in Europe and some $15trn for the rest of the world, according to the latest data produced by the Thinking Ahead Institute.

The world’s four largest asset managers—BlackRock, Vanguard, State Street, and Fidelity—generally rank as major shareholders across listed markets in the US and Europe. However, amid growing political backlash in the US, their support for environmental resolutions fell even further. BlackRock only supported 4% of environmental resolutions in 2024, compared to nearly 30% in 2021, whilst Vanguard’s support dropped to 0%, having backed only one out of 279 resolutions.

Responding to these findings, a spokesperson for BlackRock said that the manager had in fact voted against 88 so called "anti-ESG" resolutions designed to roll back climate-related disclosures but that these resolutions were not captured by Share Action's research. “BlackRock’s 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" a spokesperson for the manager said. 

The manager's response is indicative of a wider trend among managers whereby a decline in support for climate, environmental, and social resolutions is commonly justified with the claim that proposals had been overreaching or too prescriptive. However, ShareAction’s research points out that 75% of shareholder proposals put forward last year simply asked for enhanced disclosure, particularly on climate and emissions.

Climate resolutions usually tended to be more action-focused. However, the 21% of resolutions that did suggest a specific course of action would usually be centred on becoming Paris Aligned, ShareAction’s research found. ShareAction said that 48 additional resolutions would have passed if the big four managers had voted in favour.

NZAM and CA100+ – larger managers ‘dragging down’ efforts

The research comes amid a crisis among climate alliances in the wake of departures by key managers. The Net Zero Asset Managers initiative, which until recently had served as a platform for managers on climate, has suspended its activities after Vanguard, BlackRock, and other US managers announced their departure.

But ShareAction’s findings raise uncomfortable questions about the effectiveness of climate alliances such as NZAM, which is currently undergoing an internal review. Members of NZAM voted in favour of an average of 64% of climate resolutions, compared to 55% by non-members. Meanwhile, asset managers who have never been members of the initiative voted in favour of 61% of climate resolutions—a similar proportion to current members, ShareAction found, concluding that there was little evidence that membership of NZAM led to greater backing of climate resolutions.

Crucially, the report acknowledged that this picture was blurred by the larger managers who had recently left the alliance and had generally been far less supportive of climate resolutions than their peers.

Similarly, the research also showed that the managers who had recently left CA100+ had always performed poorly on resolutions flagged by the climate coalition, which otherwise had a fairly good track record on member support. On average, CA100+ members had backed 75% of climate resolutions, compared to only 33% for non-members.

ShareAction said that the managers who had recently left the alliance had so far held back support for shareholder resolutions: “Evidence from our sample shows that asset managers that have left CA100+ may have been dragging down the efforts of their fellow coalition members. The former members voted for considerably fewer flagged resolutions in both 2022 and 2023 compared to the remaining members (Figure 7). Shockingly, the departing members are now supporting fewer flagged resolutions (22% on average) than the institutions who have never been members, who voted on average for 38% of resolutions,” the report said.

US-EU divergence

This year’s research shows continued divergence between European and US managers. While the 13 US-based managers included in the survey scaled back their support for shareholder resolutions to 19% in 2024 from 25% in 2023, European managers increased their backing to 82%, compared to 68% over the same period.

Topping the league table of managers were Generali Insurance Asset Management, BNP Paribas, PGGM, and Eurizon. Indeed, all top 30 managers were European names, barring Federated Hermes, which made it to spot 27 on the league table. In contrast, the bottom 10 managers were all US names, with Vanguard, Dimensional, Capital Group, and BlackRock ranking the weakest on ShareAction’s league table.

A difference in client base could be a key reason for the change in stance. Julien Halfon, head of Pension Solutions for BNP Paribas Asset Management, argues that the manager has no intention of scaling back its climate ambitions.

“We’re keeping the line. We are aware that some managers have left the Net Zero Asset Managers Alliance, but we are not changing our stance at all. If anything, there is now even more emphasis on climate. We have been working with a number of clients to literally turn around their portfolios,” he told Net Zero Investor.

“Maybe climate alliances such as NZAM will now have a more European focus, but I see no reason why our core clients—European institutional investors, including UK pension funds—will be rowing back their climate ambitions,” he emphasised.

His views were echoed earlier this month by James Corah, head of Sustainability at UK manager CCLA, which was set up as an investment manager for churches, charities, and local authorities.

“CCLA was, and remains, proud to be a founder signatory of NZAM. Whilst others have had to step away, we know that no matter how politically inconvenient it might be, climate change is very real. For this reason, despite the suspension of NZAM, CCLA’s commitment to achieve net-zero emissions on the listed equities within its portfolios no later than 2050 remains active,” he stressed.

Will asset owners vote with their feet?

The growing divergence between US and European managers raises the question of how their main clients—institutional asset owners—will respond. Just last week, a coalition of 26 asset owners representing some $1.2trn in assets issued a statement on stewardship alignment, highlighting their continued commitment to tackling climate change.

The coalition, which includes BlackRock’s largest UK client Aegon, Australian superannuation fund Ethical Investment, multiple LGPS Pools, as well as DC master trusts such as The People’s Partnership and Nest, stressed the continued materiality of climate change as a financial risk and highlighted tackling climate change as an essential component of investors’ fiduciary duty.

The statement outlined a series of escalation mechanisms. “For some asset owners, poor or misaligned stewardship activity could contribute to a downgrade in asset manager ratings, a reassessment of the mandate, or the selection of asset managers demonstrating greater alignment with the pension scheme’s objectives,” the statement read.

Responding to the findings, Vaishnavi Ravishankar argued that they highlighted the need to ramp up dialogue with managers: “Ongoing and robust conversations between asset owners and managers are imperative—not only to challenge based on these findings, but also to understand the impediments for alignment and how we can support our managers to implement stewardship in the best long-term interests of beneficiaries,” she stressed.

In contrast, BlackRock highlights the  availability of voting choice mechanisms, which in allow owners to vote differently from their managers: "We have led the industry in providing clients with proxy voting choice and innovation through the introduction of our Voting Choice and Climate & Decarbonization Stewardship programs. The most important perspective is that of our clients – a majority of which continue to delegate voting authority to the BlackRock Investment Stewardship team notwithstanding the number of options that allow them to vote proxies themselves or to align their mandates with specific goals’’ a spokesperson said. 

ShareAction’s latest Voting Matters report highlights that the U-turn on climate is far from universal and that many managers remain committed to tackling climate change, while others show a continuous track record of underperformance when it comes to climate stewardship. It now remains to be seen how many of their clients will exercise a different vote to their manager or instead will with their feet, choosing a manager who is more aligned with their stance on climate. 

More on this:

Holding managers accountable: asset owner coalition sets out new stewardship guidelines for managers

This article has been updated on 18.02. to incorporate BlackRock's response to the research.