Vanguard, a leading mutual fund manager, revealed that it has provided support for only 2% of shareholder resolutions focused on environmental and social concerns at U.S. companies in the current year. This represents a significant decline from the 12% support it extended in the previous year. The decrease in backing has contributed to an overall decline in investor support.
Vanguard attributed the declining support rate to the increase in the number of resolutions proposed – 359 in the current year compared to 290 in the previous year. Additionally, the company noted that improved transparency and disclosure practices by companies have made several resolutions redundant.
As a Pennsylvania-based entity managing a substantial $8.2 trillion, Vanguard holds a prominent position in influencing decisions related to actions such as reducing greenhouse gas emissions and enhancing workforce diversity within companies.
This year, U.S. companies have observed a reduction in support for shareholder resolutions advocating for these types of actions. BlackRock, another major asset manager, expressed its endorsement for such advisory measures only 7% of the time, a notable drop from the 22% support it provided last year.
Vanguard’s decline in support has been more pronounced. The company, similar to BlackRock, acknowledged new securities regulations that now prevent companies from omitting certain questions from their ballots. Vanguard stated on its website that several resolutions were seeking changes that were potentially unnecessary, as some companies already demonstrated proper oversight of associated risks or had practices in place that fulfilled the essence of the resolutions.
Vanguard and BlackRock have faced criticism from various quarters. Conservative U.S. politicians have accused them of excessive focus on sustainability matters, while liberal activists argue that the firms have not done enough to address global challenges. Although Vanguard did not explicitly address the impact of these criticisms on this year’s voting patterns, it emphasized that its approach to assessing shareholder proposals has remained consistent over time.
Photo Source: Google
August 28 , 2023
Delino Gayweh
Serrari Financial Analyst
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