The Missing60

I spent just over a week trying to reach 19 asset managers. I got only three interviews (two by phone, one written responses to submitted questions) and eight policy statements sent by PR people. The result is the article I wrote today, of which I’m very proud. I think it’s important to hold asset managers to account and that’s what I’ve tried to do.

I’m including only the introduction. What follows the intro are the positions of BlackRock, Vanguard, BNY Mellon, and Fidelity--the largest asset managers to vote against the 2-degree-Celsius scenario analyses we are requesting. The final section includes statements from/interviews with those who supported the resolutions: State Street, TIAA, RBC Asset Management (Canadian), and two pension plans. If you want the full article, I’m happy to send. It will be elevated shortly on the website of Responsible Investor.

The Missing60 are found, yet still are lost

Prior to the historic Paris Agreement to reduce global greenhouse gas emissions, investors gained support at BP, Shell, Statoil and other companies for resolutions asking them to stress test their portfolios against a scenario where the 2°C goal is achieved. These measures passed with nearly 100% investor support, feeding hopes that the Paris accord would inspire continued success this year. Yet similar measures failed at Chevron and Exxon, attracting roughly 40% in favour.

Where did the other 60% of voters go? Preventable Surprises launched the Missing60 initiative to hold to account those investors who believe that non-U.S. companies should publish the annual scenario analyses but who reversed course in the U.S. The risks arising from climate change—and fiduciary duties—are not bound by geography, so why should investors have different expectations of management in different countries?

The question is somewhat facetious. The management of BP, Shell, and Statoil supported the 2°C stress test resolutions, while management at Exxon and Chevron not only advised a vote against the measures but even lobbied the SEC to keep the resolutions off the ballot. The question becomes why did 60% of investors prize loyalty to management above their right—we would argue their duty—to challenge boards and executives to show that their business models are fit for purpose in a 2°C-aligned world? Shortly before its annual general meeting, Standard & Poor’s downgraded Exxon from its coveted triple-A credit rating due to high debt levels. Yet only 40% of shareholders demanded a public accounting of how these high-cost, debt-funded fossil fuel ventures would fare in the face of increased emissions limits.

As SEC filings this month have revealed the positions taken by large investors, Preventable Surprises contacted some of the largest Missing60 voters, as well as a cross-section of asset owners and managers who supported stress tests disclosures. The explanations for their votes follow....

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