|
Corporate Social Responsibility
News
4.16.2008 - 03:51pm ET
|
CSR News from:
|
|
|
News Categories: |
| | |
Ceres Report: Mutual Fund Industry Opposition to Climate Change Resolutions Begins to Thaw
Review of Proxy Votes by 1,300 Mutual Funds Finds Shift from Solid Opposition to Abstention Middle Ground, Growing Support
(CSRwire) BOSTON, MA - April 16, 2008 - The mutual fund industry's previously icy
attitude toward climate change shareholder resolutions is beginning to
thaw as Wall Street starts to recognize the financial risks and
opportunities of global climate change, according to a new Ceres report
announced today analyzing the voting records of 1,285 funds of 62 leading
mutual fund firms.
The report, evaluating 2004-2007 proxy votes, shows that historic
opposition toward such resolutions is softening, with some fund firms such
as Goldman Sachs supporting many climate resolutions outright, and others,
such as Fidelity and Janus, abstaining on most or all resolutions after
opposing them in the past. Opposition has dropped from three-quarters of
fund votes to less than two out of three, while the number of abstention
votes has more than doubled.
Still, many mutual funds are acting inconsistently on climate change --
offering new climate-related funds and research products while continuing
to oppose virtually all climate-related resolutions. The inconsistent
behavior is especially apparent at Morgan Stanley, State Street Global
Advisors and other Wall Street firms which are investing aggressively in
new climate-related business activities, yet have opposed virtually all
climate resolutions in recent years. One positive stand-out noted in the
report: Goldman Sachs, which is both promoting climate-related investments
while also supporting climate change resolutions.
"More mutual fund firms are waking up to the broad financial realities of
climate change, but very few are integrating this awareness across all of
their business activities, including proxy voting policies," said Mindy S.
Lubber, president of Ceres and director of the Investor Network on Climate
Risk. "Investors should be scrubbing their portfolios for climate risks
just as they're now scrubbing them for hidden sub-prime risks. Mutual
funds that are ignoring climate resolutions aimed at boosting corporate
disclosure of climate risks are failing in their fiduciary
responsibilities and failing their customers."
"Fund managers are beginning to recognize that climate change issues are
an indispensable element of assessing investment risk, and that proxy
voting is one element of managing that risk," said Nell Minow, co-founder
and editor of The Corporate Library. "We expect to see increasing support
for these resolutions and withhold votes for board members at companies
whose practices and disclosures show inadequate attention to the impact of
climate change concerns."
The report, based on proxy voting data compiled by researcher Jackie Cook,
is the fourth by Ceres examining mutual fund proxy voting practices on
climate change shareholder resolutions. The report shows that near
universal opposition to climate resolutions is gradually eroding as
scientific evidence of climate change and its far reaching business
impacts has become more conclusive. The industry's reduced opposition
coincides with rising overall investor support for climate-related
resolutions, which received record high voting support in the 2007 proxy
season.
The report also highlights a growing number of climate-related fund
products and related business strategies by mutual fund firms -- a trend
that is contradicted by many of these same firms still opposing most or
all of the climate resolutions they voted on in 2007.
"Ultimately, such schizophrenic behavior is creating financial and
reputation risks for these firms -- risks easily avoided by adopting more
sensible proxy voting policies on climate change," the report concludes.
Among the report's other key findings:
Opposition to climate-related shareholder resolutions is dropping:
From 2004 to 2007, the overall level of mutual fund votes against climate
resolutions dropped from more than three out of four (77.8 percent in
2004) to just under two-thirds (65.1 percent in 2007).
Abstention votes have more doubled. Overall abstention votes on
climate resolutions have risen from 11.9 percent in 2004 to 24.4 percent
in 2007, with major firms becoming more neutral on climate resolutions
including Fidelity, Ameriprise/AXP, Janus, MassMutual and Oppenheimer.
Some mutual fund companies and related entities are boosting their
climate-related business activity while still voting against climate
resolutions. Examples include Morgan Stanley, whose mutual funds supported
none of the 215 climate resolutions they faced from 2004-2007, and State
Street Global Advisors, whose mutual funds have opposed all 54 resolutions
they faced over the same four-year period.
Only a handful of mainstream financial firms are distinguishing
themselves on climate resolutions. Goldman Sachs stands out for matching
its forward-thinking actions on climate change (such as conducting
climate-related research and investing billions in clean technology) with
its increasing support of climate resolutions (49 percent in 2007).
Schwab, MassMutual and Janus also registered relatively high support for
climate resolutions compared to other mutual fund firms.
The mutual fund industry still lags compared to other investors in
supporting climate resolutions. While climate resolutions have garnered
record record votes in recent years (average voting support at annual
meetings grew from 10.2 percent in 2005 to 21.6 percent in 2007), support
from the mutual fund industry for climate resolutions has remained
relatively stagnant.
Socially responsible investing firms are setting the bar on best
practices by supporting all climate resolutions in 2007. Calvert, Domini,
Parnassus, Pax and Walden have consistently supported all climate
resolutions, and often file or co-file many of the resolutions as well.
The report recommends that mutual fund firms take specific actions to
improve their support of climate resolutions, including the following:
Codify support for climate resolutions in their proxy voting
guidelines and then follow those guidelines by voting in favor of climate
resolutions.
Include language in their guidelines supporting resolutions calling
for better climate risk disclosure by companies, as well as resolutions
that go beyond disclosure, such as asking companies to set specific
greenhouse gas reduction goals.
Funds that have moved from opposing to abstaining on climate
resolutions are encouraged to go a step further by supporting such
resolutions.
About Ceres
Ceres is a leading coalition of investors, environmental groups and other
public interest organizations working with US companies to address
sustainability challenges such as climate change. Ceres also directs the
Investor Network on Climate Risk, a network of 60 institutional investors
with collective assets totaling $5 trillion focused on the business
impacts of climate change. For more information, visit http://www.ceres.org
or http://www.incr.com.
About the Corporate Library
The Corporate Library is a Portland Maine-based independent research firm
specializing in corporate governance. Its reports and analyses include
board effectiveness, executive and director compensation, proxy voting by
mutual funds, and assessment of litigation and liability risks. For more
information, visit http://www.thecorporatelibrary.com
|
|
