Environmental &amp;amp; Social Voting at Index Funds

Griffin, Caleb N.

doi:10.2139/ssrn.3542081

Cited by 9 publications

(8 citation statements)

References 6 publications

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“…There is a burgeoning literature exploring the voice of the Big Three in proxy voting at company AGMs (Briere et al, 2019; Fichtner and Heemskerk, 2020; Griffin, 2020; Majority Action, 2020). These studies also tend to focus on short periods of time, and what is more, they examine the Big Three’s voting on shareholder ESG resolutions separately from manager resolutions on short-term objectives like stock buybacks.…”

Section: Debating the Big Threementioning

confidence: 99%

From passive owners to planet savers? Asset managers, carbon majors and the limits of sustainable finance

Baines

Hager

2022

Competition & Change

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This article examines the role of the Big Three asset management firms – BlackRock, Vanguard and State Street – in corporate environmental governance. Specifically, it investigates the Big Three’s relationships with the publicly listed Carbon Majors: a small group of fossil fuels, cement and mining companies responsible for the bulk of industrial greenhouse gas emissions. Engaging with the corporate governance concepts of ownership and control, and exit and voice, it charts the rise to prominence of the Big Three, including their environmental, social and governance (ESG) funds, in the ownership of the Carbon Majors. Having established their status as key sources of permanent capital that are unlikely to exit from their investment positions in the world’s most polluting publicly listed corporations, the article examines how control may be exercised through voice by analysing the Big Three’s proxy voting record at Carbon Major annual general meetings. It finds that they more frequently oppose rather than support shareholder resolutions aimed at improving environmental governance and that their voting is more likely to lead to the failure than to the success of these resolutions. Remarkably, there is little to distinguish the proxy voting of the Big Three’s ESG funds from their non-ESG funds. Regardless of whether these resolutions succeeded or failed, they also tend to be narrow in scope and piecemeal in nature. Overall, the article raises serious doubts about the Big Three’s credentials as environmental stewards and argues instead that they are little more than stewards of the status quo of shareholder value maximization.

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Section: Debating the Big Threementioning

confidence: 99%

From passive owners to planet savers? Asset managers, carbon majors and the limits of sustainable finance

Baines

Hager

2022

Competition & Change

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“…But they usually vote with management suggestions, not against them. According to data compiled by Griffin (2020a), these investors only voted in favour of climate related proposals around 20% of the time in 2018-19 (69 votes out of 339 voting opportunities, based on data compiled from Table 7 in Griffin 2020a).…”

Section: Activist Campaignmentioning

confidence: 99%

“…What is interesting in this case study, is that they voted against the management of a company they own. This does not happen frequently (Fichtner, Heemskerk, and Garcia-Bernardo 2017) and only in 20% of cases in 2018-19 (Griffin 2020a). In 2022, Blackrock announced that it would not be supporting climate mitigation proposals as frequently as it did in 2021.…”

Section: Percentage Of Votes For Given Directormentioning

confidence: 99%

“…There, however, the evidence is a bit more disappointing. Working from data collected by Griffin (2020a), I find that for Vanguard, their socially responsible investing funds NGOs could also take the lead. A credible climate ETF could outsource its voting to a credible climate actor, such as the WWF, Greenpeace or another large climate NGO.…”

Section: Percentage Of Votes For Given Directormentioning

confidence: 99%

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Shareholder engagement for climate change: Lessons from the ExxonMobil vs Engine No.1 proxy battle

Naef¹

2022

Preprint

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This paper offers a case study of how a small shareholder managed to impose three more climate-conscious directors on the board of ExxonMobil, one of the world’s largest scope 3 CO2 emitters. This concrete approach to fossil fuel companies’ transition might prove useful for climate change mitigation. The policy has the advantage to work in a vacuum. It has positive impacts on emissions regardless of what other actors do, unlike policies such as global carbon taxes or large-scale divestment, which need more coordination. But it comes with limitations. I find that the proxy campaign led to more attention for the hedge fund running the campaign. It was used as a marketing tool. Despite the limitations, proxy battles could prove a useful approach to pragmatic climate change approaches.

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“…In addition, Griffin (2021) shows that support for CSR proposals is low for the Big Three (Vanguard, BlackRock, and State Street), and He, Miletkov, and Staneva (2020) find that agency frictions, such as short-termism and manager friendliness, negatively affects mutual funds' support for CSR proposals.…”

Section: : the Determinants Of Successmentioning

confidence: 99%

An end has a start

Tissen¹

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Environmental & Social Voting at Index Funds

Cited by 9 publications

References 6 publications

From passive owners to planet savers? Asset managers, carbon majors and the limits of sustainable finance

From passive owners to planet savers? Asset managers, carbon majors and the limits of sustainable finance

Shareholder engagement for climate change: Lessons from the ExxonMobil vs Engine No.1 proxy battle

An end has a start

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