FOR IMMEDIATE RELEASE
Mutual Funds Boosting Focus on Climate Change When Voting Their Proxies, New Report Finds
But Fund Giants Fidelity and Vanguard Stand Out for Their Failure to Support Any Climate Resolutions in 2009
The financial world increasingly understands that climate change will have far-reaching business impacts on a wide array of industries. And that’s translating into ever-growing support by many of the nation’s largest mutual funds in favor of climate-related shareholder resolutions filed with U.S. companies.
That’s the finding of this year’s fifth annual Ceres analysis of mutual fund votes by 46 leading mutual fund families collectively managing more than $5 trillion in assets. The analysis, “Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions,” was jointly conducted with FundVotes.com, which has tracked U.S. mutual fund voting since reporting was first required in 2004.
As in past years, fund giants Fidelity and Vanguard lagged their industry peers by failing to support any climate-related resolutions in 2009. The survey also shows continued inconsistency in the wider industry’s handling of climate proxies, with different funds in the same fund families taking opposing stands on the same climate resolutions.
“We’re making progress in getting mutual funds to focus on climate change, but not enough of it,” said Ceres President Mindy Lubber. “Climate-related risks and opportunities should be apparent to all publicly-traded companies and to investors who own them.”
Fidelity and Vanguard proxy voting guidelines treat climate resolutions as “ordinary business matters” that should be considered only by management. Such guidelines imply that climate-related risks and opportunities are not material and will not impact long-term shareholder value.
That’s the wrong stance, said Lubber. “Climate risk is a quintessential bottom-line concern,” she said. “And when mutual fund companies vote against climate resolutions, it raises serious questions about whether they’re violating their fiduciary duty by not representing their customers’ long-term financial interests.”
Among the key findings from this year’s report:
- Businesses are experiencing growing direct impacts from climate change, including widening physical impacts, new carbon-reduction policies and new regulations both in the U.S. and abroad, plus a rise in climate-related litigation.
- Mutual fund industry support for climate resolutions is growing year by year –average support among the 46 fund families analyzed grew from just over 15 % in 2004 to a significant 28% in the 2009 proxy season. That number is significant because it’s large enough to attract the notice of company management and even move managers to action.
- In several cases (Massey Energy, Dover Corp., Mirant Corp.) total shareholder support for climate-related resolutions topped 40%, and in the case of Idacorp Inc. it came in at 51.2%.
- Leaders on voting in support of climate resolutions in 2009 include Wells Fargo supporting 82% of climate resolutions, TIAA-CREF supporting 79%, and Schwab supporting 77%.
- State Street and ING opposed every climate resolution voted on over the six years, and Vanguard abstained on almost all climate votes.
- Fidelity switched from opposing all climate resolutions after the 2006 proxy season and in 2009 abstained on all.
- Resolutions requesting specific greenhouse gas emission reduction goals received the highest average levels of support from mutual funds in 2009, garnering more support than resolutions requesting risk disclosure reports or policy changes.
The Ceres study comes on the heels of the U.S. Securities and Exchange Commission’s formal guidance outlining the types of climate-related disclosure companies should be providing to investors in their financial filings. The SEC issued the guidance in February after formal requests from dozens of leading institutional investors.
Ceres is a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change. Ceres also coordinates the Investor Network on Climate Risk, a network of 90 leading investors with collective assets totaling $10 trillion focused on the business impacts of climate change.