European firms leading the way on engagement

European asset managers are making the most progress on engagement, according to new research by ShareAction.

ShareAction’s Voting Matters Report revealed US and UK asset managers are failing to improve their voting behaviour at the same rate as European firms.

The study of how 68 of the world’s largest asset managers voted on 252 shareholder resolutions found that European asset managers backed 81% of proposals in 2022.

Whereas US asset managers only supported an average of 43% of environmental and social resolutions.

The engagement activity seen in Europe last year is a growing trend.

With firms backing 81% of proposals in 2022, this was up from 69% the year before.

However, US and UK asset managers only showed a 1% increase between 2022 and the year prior.

Claudia Gray, head of financial sector research at ShareAction, said: “As we can see from encouraging progress in Europe, change is possible. The data clearly shows that there is no intrinsic link between the size of an asset manager and voting progressively on pressing issues like climate change, human rights, or public health.”

ShareAction also compared the voting performance of the 68 largest asset managers with 10 asset managers commonly used by UK charities.

An average of 65% of resolutions were voted for by the 68 asset managers, however, charity asset managers only voted for 57% of proposals.

According to ShareAction, European asset managers’ improved performance has been driven by the strengthening of EU legislation on ESG reporting.

In September 2020, the EU Shareholder Right Direction was launched, which required firms to report on their shareholder engagement and investment strategies.

Even though the US has made some attempts to strengthen financial legislation, the country has still not established any mandatory reporting requirements for ESG.

The lack of mandatory ESG reporting requirements in the US was pointed to as driving this divergence in voting trends with Europe.  

© 2023 funds europe

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