Shareholders are voting for greater transparency on lobbying and political activity at the US companies they invest in, but fund giants Vanguard and BlackRock are holding back support.
Research by Morningstar has found a steady stream of shareholder resolutions at US companies requesting greater transparency over recent years.
There were 48 shareholder resolutions in the 2022 proxy year requesting greater transparency on lobbying and political activity at US companies.
These resolutions gained a solid 35% average overall support from shareholders.
However, this represents a noticeable year-on-year decline as asset managers were less inclined to support what they saw as prescriptive or duplicative shareholder resolutions in 2022.
Over the last three proxy years, 149 such resolutions were supported by 38% of shareholders on average, peaking at 41% in 2021.
Overall, the top 10 US managers showed lower support for lobbying resolutions (average 34%).
Vanguard and BlackRock supported less than 20% of the resolutions, while Invesco showed the highest support at 75%.
Climate-related lobbying
Twelve of the 149 resolutions in the last three proxy years focused specifically on climate-related lobbying.
These enjoyed a higher level of shareholder support at 49% on average over the three years, peaking at 61% in 2021.
Support fell to 31% in 2022, reflecting the pullback in support for “prescriptive” resolutions.
The top 10 US asset managers also showed slightly lower average support (47%) than the overall average for climate-related lobbying resolutions over the last three proxy years.
Dimensional (11%), BlackRock (27%), and Fidelity (30%) showed the lowest support for these resolutions among the top 10.
JP Morgan and Invesco both cast more than 80% of their fund votes in favor of the 12 climate-related lobbying resolutions in the last three proxy years.
While T. Rowe Price, Franklin Templeton, and State Street all showed greater than 50% overall support for these proposals.
In comparison, eight selected European managers—Abrdn, Allianz Global Investors, Axa IM, BNP Paribas AM, Fidelity International, LGIM, Schroders, and UBS AM—showed over 90% support for these proposals, with five managers supporting all 12 such resolutions.
Sustainable investing has become an increasingly political matter in the United States.
In light of this, the Morningstar research said this is a much greater need for asset managers to scrutinize corporate lobbying practices and political spending as part of their role as stewards of investors’ capital, particularly ahead of International Women’s Day on March 8.
It added: “There is broad recognition of this need with regard to climate change and companies’ net-zero strategy.
“But there is a need for greater transparency on corporate political activity across a range of environmental and social issues, so that investors can make informed decisions on how to allocate their capital.
“This places a responsibility on asset managers to ensure that companies’ lobbying practices align with their statements on sustainability.”