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@MSF and AndyJ: State Street funds ramp up support for climate-change measures
Hi, I saw that you expressed interest in fund shops that supported climate change resolutions. Well, it seems State Street has officially acknowledged that climate change matters and is now expressing its concern with its proxy votes: reuters.com/article/us-climate-statestreet-idUSKCN11C2HK Since State Street offers competing low-cost index ETFs, it is a worthy alternative to the naysayers.
Agreed, being a one-issue investor isn't always wise, but it is not worth looking at State Street's 2015 numbers. The important news here is the shift in voting in 2016. According to the article: "State Street supported the resolutions 51 percent of the time at S&P 500 companies including Exxon Mobil Corp and Chevron Corp in this year's proxy season, up from 14 percent last year, according to a review of recent securities filings by research firm Fund Votes." This is an important change that could ultimately influence other fund companies. It will be interesting to see whether State Street has shifted its votes on any other governance issues as well.
Thanks, Lewis. My interest in this story, and that earlier Vanguard story, is in watching the investment industry's slow awakening to climate risk and how long it's taking to reach the same level of realization as the insurance industry and the Dept. of Defense, for example.
Some investment houses, like Vanguard, don't even appear to understand that the resolutions being proposed are about investment risk, while others, like HSBC, have been warning investors for some time that these are risks they really need to take into account.
@AndyJ, You're right that the insurance industry is way ahead on this issue as are asset managers owned by foreign financial conglomerates. It's no accident I think that funds run by Allianz and Deutsche Bank are voting for these resolutions. They've begun to do the math on how much climate change could cost their investment portfolios and financial institutions in general--both from just a physical damage standpoint and a regulatory standpoint. You can't be a financial institution in Europe today and believe that regulators will continue to give fossil fuel dependent companies a free pass forever. I think science will eventually prevail over rhetoric with regulators in the U.S. too.
Interesting point that foreign entities are leading. Reminds me that the first things I read about the insurance industry's waking up to climate risk were about Swiss Re's perspective on it, if I'm recalling correctly - that was several years ago.
Comments
FWIW, here's SSgA's 2015 proxy voting record (all 9945 pages):
https://www.ssga.com/investment-topics/environmental-social-governance/2016/2015-Vote-Summary-Report.pdf
and its proxy voting guidelines:
https://www.ssga.com/investment-topics/environmental-social-governance/2016/Proxy-Voting-and-Engagement-Guidelines-US-20160301.pdf
As important as the environment is, I'm not a one-issue voter or investor. For instance, I've mentioned executive compensation. On that, SSgA is among the worst (though the average is nearly as bad):
http://www.asyousow.org/wp-content/uploads/2015/12/statestreet-2016-execcomp-resolution.pdf
Pick your poisons and your managers accordingly.
Some investment houses, like Vanguard, don't even appear to understand that the resolutions being proposed are about investment risk, while others, like HSBC, have been warning investors for some time that these are risks they really need to take into account.