Asset managers’ support for shareholder resolutions designed to tackle social and environmental issues “crashed to a new low” last year, according to a recent report from responsible investment charity ShareAction.

Voting Matters 2024 is based on a study of how 70 of the world’s largest asset managers voted during last year’s proxy season on 279 resolutions that sought to improve companies’ social and environmental impacts.

Only a total of four resolutions from the study sample – just 1.4% – received majority assent. That’s down from 3% the previous year and 14% in 2022.

The world’s four largest firms – BlackRock, Fidelity Investments, State Street Global Advisors and Vanguard, which together manage $23tn in assets – were among the worst performers. On average, they supported only 7% of the 279 resolutions, with Vanguard backing just one.

ShareAction notes that 48 of the selected resolutions would have passed had those four firms supported them. This would have increased pressure on companies to improve their climate change targets, human rights impacts, lobbying and discrimination records.

The charity says the findings are in line with a broader US trend of diminishing support for shareholder resolutions. Indeed, US firms supported only a fifth of all resolutions on average – down from a quarter in 2023 and falling for the second year in a row.

Malnourished support

Patchy results emerged for asset managers that are part of net-zero or climate-focused investment alliances. For example, the study found that membership of the Net Zero Asset Managers Initiative has only a marginal impact on how asset managers vote on climate resolutions. On average, members voted in favour of 64% of relevant resolutions, compared to 55% of non-members.

However, Climate Action 100+ members vote more ambitiously than those who have dropped out of the initiative. Asset managers who have left performed poorly on resolutions flagged by the scheme, supporting an average of 22%. That’s far lower than those that have remained members (75% on average), and worse than those that were never onboard (38%). Firms that departed the scheme had also voted for a lower number of resolutions in 2023, before making their exit.

Across the board, critical issues suffered from malnourished support. Ten asset managers, including the world’s four largest, voted against every single human rights resolution at companies involved with weapons production, despite use of weapons produced by these companies being linked to human rights abuses.

Just two out of 73 resolutions on climate change passed. As the report notes: “While the risks to companies and investors from climate change are well established, asset managers failed to support resolutions on topics from financing to decarbonisation targets.” The two resolutions that got over the line were mainly related to disclosure and not aligned to scientific consensus on net zero.

Only a single resolution relating to human and labour rights disclosures made it through AGM season, compared to four in 2023, despite an increase in the number of social resolutions surveyed.

In parallel, the number of shareholder resolutions addressing global biodiversity loss remains low – and asset managers’ support for them is falling. The five biodiversity-related resolutions in the study sample received just 11.6% support this year on average, compared to 22% backing for similar resolutions the previous year. However, members of the Nature Action 100 initiative were more likely to vote in favour of biodiversity resolutions, showing that among committed asset managers, momentum remains.

Worrying retreat

Overall, ShareAction frames the muted support for environmental and social resolutions as a source of missed opportunities. For example, the charity says, had asset managers backed them, proposals floated by shareholders at 190 companies could have improved conditions for low-paid workers struggling with the soaring cost of living, and spurred urgent climate action at a time when the impacts of global warming are devastating lives around the world.

ShareAction Head of Financial Research Claudia Gray describes the findings as the worst that her organisation had seen from asset managers in the six years it had been monitoring their voting performance, and shows a “worrying retreat” from ambition at a time when it is most needed.

She stresses: “This should be of great concern to asset owners who are putting their faith in asset managers to act in their best interests. If ever we needed asset owners to be the drivers of responsible investment, it’s right now. We need their leadership to hold asset managers to account at such a critical time for people and planet.”

For ICAEW Director, Sustainability, Richard Spencer, the report makes disturbing reading. “The crises of climate, nature loss and inequalities are also crises of economic prosperity and business value,” he says. “Without a thriving planet and society there is no economy. But as we saw in other recent reports by Carbon Tracker and the Institute of Actuaries, the markets are largely ignoring the risks. In many ways, those reports support ShareAction’s findings.”

Spencer acknowledges that the overall picture is complex. For example, recent research by global management consultants Kearney shows that CFOs are focused on sustainability as a strategic issue, a finding reflected in ICAEW’s membership. However, he notes: “We need leadership and a clear sense of direction across the economy. Asset managers must play a core role in that.”