Largest Fund Managers Face Conflicts of Interest when Voting Proxies
04.18.2017 50/50 Climate Project
While shareholder resolutions calling on companies to proactively address the risks to investors from climate change received record levels of support last year, asset managers including JP Morgan, Fidelity, Vanguard, BlackRock, and BNY Mellon frequently voted in favor of management and failed to support the resolutions.
In a new report, the 50/50 Climate Project found that the managers who tended to vote in favor of management received more in fees and stewarded more assets than all other managers combined, and that their voting practices were even more management friendly at companies with which they had business relationships.
The asset managers examined manage assets worth billions of dollars for the retirement plans sponsored by the portfolio companies at which they voted. The managers also receive millions of dollars in fees for managing such plans. The full report is publicly available online here.
“By quantifying, in dollar terms, the sizeable magnitude of business ties between managers and their portfolio companies, this report shines new light on competing and potentially conflicting interests. It provides a practical framework that investors can use to engage asset managers on mitigating conflicts of interest.”
– Edward Kamonjoh, 50/50 Climate Project Executive Director
The report examines the conflicts of interest that large asset managers encounter when casting proxy votes on climate-related shareholder resolutions. It analyzes data from Form 5500 filings submitted to the Department of Labor by retirement plans sponsored by energy and utility companies, and compares this data to how well asset managers scored on the 50/50 Climate Project’s 2016 survey of shareholder votes on key climate-oriented proposals.
The report is titled “Proxy Voting Conflicts: Asset Manager Conflicts of Interest in the Energy and Utility Industries.” Read it in full here.