Sunday, November 16, 2014

Analysis Shows Growing Support from U.S. Mutual Funds for Action on Climate Change Risks

Figure 1. Large US Mutual Fund Votes on Sustainability Resolutions (Credit: Click to Enlarge.
More U.S. mutual fund companies are acting to address the threat of climate change in their portfolios, with one-third of votes cast across 42 fund families supporting climate-related shareholder resolutions on average in 2014, according to an analysis by the sustainability advocacy group, Ceres.

As shown in Figure 1, the 2014 proxy season saw one of the sharpest increases ever in support for climate-related resolutions in the past decade, with 11 fund groups – including GMO, John Hancock, Delaware and Oppenheimer – increasing their support for climate-related resolutions by 12 percent or more between 2013 and 2014.  Morgan Stanley, for example, supported climate resolutions 70 percent of the time in 2014 – a shift from supporting only 13 percent in 2013.

Figure 2. Mutual Fund Families Resolutions 2013 2014 (Credit: Click to Enlarge.
The analysis, summarized in Figure 2, found that out of 42 fund families, 13 supported more than half of the climate-related resolutions that they voted on, and six supported at least 80 percent compared with only two in 2013.  Deutsche Asset Management (DWS Funds) continued to lead – as in 2013, the company supported every climate-related resolution that it voted on in the 2014 proxy season.

Despite these positive trends, however, eight fund families failed to cast a single vote in support of a climate-related resolution in 2014, the most noteworthy being Vanguard.  As a member of the Principles for Responsible Investment (PRI), Vanguard has publicly committed that: “We will be active owners and incorporate ESG [environmental, social and governance] issues into our ownership policies and practices;” and “We will seek appropriate disclosure on ESG issues by the entities in which we invest.”  Since many of the resolutions request exactly this type of disclosure – by seeking sustainability reports, for example – Vanguard is clearly failing to live up to its public commitments.

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