The Missing60 are found, yet still are lost

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By Casey Aspin, Communications Director

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 votes 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 tightening emissions regulations and a transition away from hydrocarbons in the transport and power generation sectors.

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.



BackRock believes that its engagement with thousands of investee companies is a more effective means of ensuring climate-ready business models than via support for shareholder resolutions targeting a few select companies, according to Michelle Edkins, a Managing Director at BlackRock and Global Head of Investment Stewardship. She would not comment specifically on the Exxon and Chevron votes, but spoke broadly about BlackRock’s approach to stewardship.

While some U.S. companies want to dismiss ESG issues as a niche interest among labour unions and environmentalists, BlackRock uses its position as the world’s largest asset manager to make clear that it sees climate risk as material. “Engagement is as much us sharing with them as them telling us their views,” she said. “It’s an open exchange of opinion and perspective based on trust. If they give a clear sense that they get the point and are willing to adapt, we give them time.”

She also noted that exposure to climate risk is a systemic issue requiring a systemic solution: “We are actively participating in the market-level debate. This is a systemic risk that you can’t diversify away from.” BlackRock is a member of the FSB’s Task Force on Climate-Related Financial Disclosures (TCFD) and Edkins is involved with organisations such as the Sustainability Accounting Standards Board (SASB) and the International Corporate Governance Network. In 2015, BlackRock co-published with Ceres a guide to help U.S. institutional investors engage with companies on sustainability issues.

Edkins, who started her corporate governance career in 1997 at Hermes Pensions Management, said in her experience policy development is most effective when it’s practitioner led. She said FSB TCFD and SASB are both examples of groups aiming to produce practitioner-developed outcomes that are more effective than a top-down approach that can lead to unintended consequences. “There are a lot of promising things happening at a market level that will lead to better disclosure and to consistency among peers,” she said.

Preventable Surprises appreciates the importance of private engagement, but we also believe that transparency underlies the proper functioning of markets. Private conversations between privileged investors and executives prevent investors who are not privy to those conversations from making informed choices. Greater transparency is needed in corporate reporting on climate risk assessment and management at fossil fuel companies, utilities, and other exposed sectors.

While we applaud BlackRock’s work on a policy level, we also note Exxon’s ongoing funding of the American Legislative Exchange Council, which has long promoted climate change denial to state legislators and promotes “model” bills designed to protect the interests of its oil, gas and coal funders. The reality is that Exxon has known for decades about the climate-related financial and physical risks to its business linked to greenhouse gas emissions and has consistently worked to impede a regulatory response. Responsible investors must not condone such behaviour through proxy votes.



Vanguard provided the following statement:

“As a matter of policy, we generally abstain from voting on proposals (typically on environmental and social topics) that we do not believe have a clear link to increasing shareholder value. The vote aside, if the topic of the proposal is something we believe to have long-term value implications, we will engage with the company to understand their processes for overseeing and managing those risks.”

On its website, Vanguard relates that it discussed shareholder proposals with a large oil and gas company. “After analyzing the issues underlying the (resolution), we have encouraged the company management to make specific improvements in how it assesses the severity of these risks, communicates to shareholders about the risks, and works with key stakeholder groups to improve practices.”

Like BlackRock, Vanguard is content with private conversations, leaving the rest of us to wonder what questions were asked, what answers were given, what are the repercussions if promises are broken? Given that Exxon has forecasted 25% growth in oil consumption over the next 24 years, it is clear its leadership has not been able to think in terms of a transition to a low-carbon future.

Vanguard asserts that there is no link between the stress test proposals and shareholder near-term valuations. Bank of England Governor Mark Carney calls this the tragedy of the horizons: Investors who do not anticipate a short-term impact will not act to address long-term systemic risk, even as ice shelves dissolve, species disappear, coastal property becomes uninsurable, and systemic risk builds. Carney created a task force that is designing a consistent and transparent system for reporting climate risk. Systemic risk by nature is pervasive, inter-related, and unpredictable, as the housing crisis showed. As a dominant passive investor, Vanguard should be a leader in leveraging its ownership position to address climate risk. By not holding Exxon and Chevron to the same standards of disclosure as at other oil majors, Vanguard is condoning industry laggards.


BNY Mellon

BNY Mellon’s statement emphasized that its investment arm is made up of more than a dozen investment management boutiques and a wealth management division, and each votes “in the best interest of its clients and in accordance with the clients’ investment practices.”

Like BlackRock and Vanguard, several of BNY Mellon’s subsidiaries are signatories to the Principles for Responsible Investing. The third principle states: “We will seek appropriate disclosure on EST issues by the entities in which we invest.” Global warming is humankind’s most pressing and obvious risk; it is difficult to understand how investors who oppose disclosure of these risks can remain PRI signatories. 


Fidelity Investments

Fidelity’s statement said the company votes “based on an evaluation of a proposal’s likelihood to enhance the long-term economic returns or profitability of the portfolio company or to maximize long-term shareholder value. Where information is not readily available to analyze the long-term economic impact of the proposal, FMR will generally abstain.”

Preventable Surprises believes that the Paris accord has made it untenable for asset managers to ignore the risks to their beneficiaries posed by carbon-intensive portfolio holdings and negligent company management. We will work toward proxy votes in 2017 that will force laggard companies to recognize and respond to the paradigm shift that the Paris accord represents. The charts below list the largest of the Missing60 voters. Following the charts are contrasting points of view from leading asset managers and owners who have embraced a 2°C-aligned future.  

The Missing60

All data from ProxyInsight

List excludes: Sovereign wealth funds, asset managers not covered by SEC disclosure requirements, and votes not yet processed.


% shares

Vanguard 6.62
BlackRock 5.9
BNY Mellon 1.44
Geode Capital Management 0.84
JPMorgan 0.78
Dimensional Fund Advisors 0.64
Capital Research Global Investors 0.41
FMR 0.36
Invesco 0.24
American Century 0.21



% shares

Vanguard 6.62
BlackRock 6.13
FMR 2.64
Capital World 2.13
BNY Mellon 1.33
Franklin Resources 1.07
Geode Capital Management 0.83
JPMorgan 0.78
Capital Research Global 0.75
Wells Fargo & Co. 0.74

Source: ProxyInsight


The situation is far from bleak. While many large investors are not judging climate change as a material, immediate risk to their portfolios, those listed below supported the disclosure resolutions based on their interpretation of a fiduciary duty to protect their beneficiaries.

 State Street Global Advisors

The largest Exxon Shareholder to back the stress test proposal, State Street issued guidelines in the wake of the Paris accord to spell out its expectations of boards regarding how to assess climate risk. State Street makes case-by-case decisions when voting proxies but will support climate resolutions “if companies’ disclosure, practice and board governance structures were found to be inadequate or did not meet market practice,” Rakhi Kumar, head of Corporate Governance at SSGA, said when the SEC votes initially became public.


TIAA Global Asset Management

In a statement from TIAA, which manages approximately $890 billion, it noted a long history of supporting shareholder proposals that seek disclosure on the management of material environmental, social, and governance risks. It further stated:

“TIAA values both voting and engagement as tools to help enhance and protect our participants’ long-term interests. We believe that December’s Paris Climate Agreement was instrumental in providing certainty on climate targets and serves as an important market signal on the risks as well as opportunities that investors face on these issues.”


RBC Global Asset Management

Judy Cotte, a Vice President at RBC and Head of its Corporate Governance & Responsible Investment division, disagreed with BlackRock’s position favouring engagement over public proxy votes. “Meaningful disclosure is often a pre-condition of an effective engagement process,” she said. “With large companies that are widely held with fewer significant shareholders, such as Exxon and Chevron, it can take longer to achieve meaningful change through engagement. In those circumstances, support for a shareholder proposal calling for additional disclosure, when warranted, can be an efficient and effective way to encourage companies to provide additional disclosure.” RBC has approximately $370 billion (Canadian) under management.

RBC is one of several large institutional investors—including AllianceBernstein, AXA IM, HSBC Global Asset Management and TD Asset Management—that lined up in favour of the 2°C stress test proposals, finding the related risks material and in need of increased disclosure. Unlike TIAA and State Street, these managers also supported a 2°C transition plan resolution at Southern Company that goes a step further, requiring Southern to explain how it would retool its business operations, R&D investment, remuneration and lobbying to align with the 2°C scenario put forward in Paris. The positions show that commercial fund managers and large asset owners are increasingly willing to challenge major corporations on their laggard behaviour.


Canadian Pension Plan Investment Board

With $264 billion (Canadian) under management, CPPIB is Canada’s largest pension plan. In its statement, it argued that the requested disclosure “enables investors to better understand and evaluate potential risk and return, including the impact of environmental and social factors on a company’s long-term performance. We believe companies that effectively manage risks associated with environmental and social factors are likely to achieve better long-term performance.”


Florida State Board of Administration

According to its corporate governance principles, Florida SBA generally supports resolutions that address issues that could have a substantial impact on shareholder value. It supports disclosure requests “when there is a reasonable expectation that the information would help investors make better risk assessments.”

The fifth largest pension plan in the U.S. with $150 billion in assets, SBA is a passive investor in U.S. equity indexes—the largest weighting in its portfolio. It sees proxy voting as an important means of addressing risk, given its inability to exit a position, said Michael McCauley, Senior Officer, Investment Programs & Governance. SBA sees carbon-intensive companies as posing a high risk to its portfolio. “We want to see disclosure and demonstration that the company is planning” for a 2°C scenario. Unlike many in the Missing60, SBA takes an omnibus approach on ESG issues—applying its position across markets.

Votes against Southern Transition Plan

All data from ProxyInsight

List excludes: Sovereign wealth funds, asset managers not covered by SEC disclosure requirements, and votes not yet processed.


% shares

Vanguard 6.11
BlackRock 6.09
State Street 4.71
Franklin Resources 1.25
BNY Mellon 1.07
FMR 0.86
Geode Capital Management 0.8
Goldman Sachs Group 0.47
Invesco 0.42
Duff & Phelps IM 0.23
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