No Evidence of CA100+ Voting Collusion
Analysis shows US support for climate-focused shareholder proposals diverged from EU, as investor-led initiative updates FAQs to further assuage anti-trust concerns.
A new report from Morningstar has found the proxy-voting records for 20 high-profile climate resolutions last year contradicted accusations of collusion levelled at Climate Action 100+ (CA100+).
The investor-led initiative has faced accusations of collusive behaviour from some US Republican politicians, which it denied, as well as the recent departures of several large US asset managers.
CA100+’s rebuttal is backed by Morningstar’s research, which found voting records “indicate that concerns over potential collusion by signatories are overstated” with a wide range of voting approaches reported.
Republicans also previously sent a letter to “climate groups”, including CA100+, which alleged they could be violating anti-trust laws.
CA100+ was established in 2017 with the aim of collectively supporting the goals of the Paris Agreement by challenging the large corporate greenhouse gas emitters to take action on climate change. Today, the initiative counts 700 investors as signatories, responsible for a combined US$68 trillion in assets under management.
A total of 170 firms representing a total market capitalisation of US$10.3 trillion have been engaged through the initiative to date, across sectors including oil and gas, aviation, mining and consumer goods.
Each year, CA100+ flags a number of shareholder resolutions and management proposals for investors to consider when voting at company shareholder meetings. The 20 climate-related shareholder resolutions flagged by CA100+ in 2023 were at 15 companies – 10 listed in North America, four in Europe, and one in Asia.
Morningstar reviewed the voting records of a selection of 60 institutional shareholders with publicly available global voting decision information. The shareholders were comprised of 40 asset managers evenly split between the US and Europe and 20 public pension asset owners in the US and Canada.
Fifty of the institutions were CA100+ signatories during the 2023 proxy season, with 35 being asset managers – including five firms that subsequently exited or amended their participation – and 15 asset owners. These 50 signatories reviewed supported an average 76% of the resolutions.
Morningstar’s report noted a divide between US and European firms’ support for the flagged resolutions. The 20 analysed US managers supported an average 48% of the 20 resolutions while the 20 European managers reviewed supported an average 85%.
Common goal
In an update to its frequently asked questions (FAQ) last month, CA100+ stressed its activities and requirements do not violate anti-trust laws and policies prohibiting the sharing of competitively sensitive information.
“Anti-trust laws protect competition and prohibit various practices that harm consumers,” the website read. “These laws do not prohibit investors or companies from working together to achieve a common goal that is not anti-competitive and that they have each independently decided is in their interest.
“The fundamental principle that underpins CA100+ is that climate risk is financial risk [and] investors have stated that [the initiative] promotes their ability to fulfil their fiduciary duties,” it added.
The FAQ update followed four US asset managers – Invesco, JP Morgan Asset Management, Pimco, and State Street Global Advisors – choosing to leave CA100+ in February, while BlackRock opted to restrict its participation to its non-US business.
A number of the departing firms cited the upgraded requirements under ‘phase two’ of CA100+, announced last year, which calls on signatories to enhance disclosures and implement transition plans.
The five exited or amended signatories’ support for the 20 resolutions flagged by CA100+ averaged 45%, with a range of 10% to 95%.
“While we are disappointed to see them go, hundreds of investor signatories remain committed to ensuring 170 of the largest greenhouse gas emitters reduce emissions, improve governance, and strengthen climate-related financial disclosures,” CA100+ said in a statement responding to the departures.
Morningstar noted the average voting profile of the five exited or amended signatories is “very similar to that of other US managers”. It added that neither BlackRock nor State Street, the largest of the five exited/amended CA100+ firms, supported more than 25% of the 20 flagged resolutions.
Published last November, the UK Asset Owner Roundtable-commissioned UK Asset Owner Stewardship Review 2023 suggested there was stronger misalignment between the long-term interests of domestic asset owners and their US-owned asset managers versus those headquartered in the UK.
The roundtable aims to extend its analysis of voting instructions to asset owners from other jurisdictions such as the EU or the US to investigate the extent to which cultural misalignment leads to stewardship misalignment.
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