Why Proxy Votes are Important for ESG Investing

When investing client assets in ESG-focused funds, don’t just consider a fund’s investment strategy and holdings; look also at its proxy voting history and current votes on shareholder resolutions, now that the proxy voting season is underway. What you find may surprise you and/or your clients.

According to a new report from Morningstar focused on climate-related shareholder resolutions in 2018, only funds from traditional socially responsible fund companies like Calvert (owned by Eaton Vance) and Pax World Funds voted consistently in favor of climate-related proxies that garnered the support of more than 40% of shareholders.

ESG funds from more traditional fund companies like BlackRock and Fidelity often voted against those resolutions. BlackRock opposed more climate change resolutions than other traditional asset managers, according to Morningstar, despite statements by CEO Larry Fink about the importance of environmental, social, and governance issues for corporate valuations, included in his annual letter to CEOs.