Environmental, social, and governance, or ESG, investing is marching forward. On Wednesday, BlackRock announced an expansion of its ESG offerings, along with a $600 million investment from Ilmarinen, Finland’s largest pension insurance company, into BlackRock’s iShares ESG MSCI EM Leaders ETF (ticker: LDEM).
Thursday’s Morningstar report showed support for ESG initiatives rising to 46% from 27% among large fund families. Funds offered by Allianz Global Investors, Blackstone, Eaton Vance and Pimco were the most likely to support shareholder-proposed ESG resolutions in 2019. Those fund families voted for such resolutions 87% of the time.
Five of the 10 largest asset mangers—Vanguard, BlackRock, American Funds, T.Rowe Price, and DFA—voted against more than 88% of ESG-related shareholder resolutions. Large fund groups voting against ESG initiatives kept many of them from achieving majority support. Of 23 resolutions receiving 40% support, 19 of them would have passed with the support of just one of the largest-two asset managers. None of the firms were immediately available for comment.
BlackRock, however, has indicated publicly a willingness to invest more in accordance with ESG principles.
The study tracked voting patterns for 12 issues: climate change, cybersecurity, diversity, environmental stewardship, ESG/sustainable governance, gender pay equality, human rights, lobbying, political spending, reputational risks of products (opioids and guns), workplace sexual harassment claims governance, and other.
The Morningstar report also cited BlackRock’s willingness to vote against management on proxy proposals—outlined in CEO Larry Fink’s recent letter to clients—as a signal that other asset managers will have to consider following suit.
Overall, asset managers are responding to shareholder proposals more frequently “to advance sustainable business practices at investee companies…and to enhance longterm shareholder value while also responding to growing pressure from clients, peers, and regulators,” the Morningstar report said.
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