The four largest asset managers are failing in their fiduciary duties when it comes to shareholder racial equity votes, according to a major union and other progressive groups.
BlackRock, Vanguard, Fidelity and State Street voted against 44 shareholder proposals last year "on critical racial equity issues" that could have won a majority with their individual or collective support, according to
The four asset management companies, which carry huge weight in shareholder votes as part of their more than $24.6 trillion in combined holdings, have been dealing with conservatives' anger toward what they describe as
[Scroll down to the slideshow to see the companies' records in last year's proxy vote season.]
"Systemic racial inequalities and the lack of opportunities, and the ways in which workers don't share fully in the benefits of the economy, those are systemic risks for long-term investors," New York City Comptroller Brad Lander, who oversees $240 billion in pension investments on behalf of the city's public employees, said at a virtual briefing last week about the report.
"The massive gaps in income and wealth between white families and Black families and Latino families, they don't just hurt communities, they undermine growth and long-term value creation, all across our economy," Lander said. "So, as pension stewards, as responsible fiduciary investors, we've got an obligation to pay close attention to how companies in our portfolio are addressing and managing those risks."
The four giants "effectively blocked action" on the left-wing groups' priorities
"The four largest asset managers lag behind their peers and support across nearly every critical vote category analyzed," Eli Kasargod-Staub, the executive director of Majority Action, said at the event. "Their lagging performance had outsize impact on proxy voting outcomes. By our analysis, out of over 100 proposals analyzed, 44 shareholder proposals related to racial equity injustice could have reached majority support but for the votes of just one or more of BlackRock, Vanguard, State Street or Fidelity."
Representatives for Fidelity and State Street didn't respond to emails seeking comments on the groups' findings.
"As an investor-owned asset manager, Vanguard is singularly focused on maximizing our clients' returns and giving them the best chance for investment success," spokesman Netanel Spero said in an emailed statement. "Our investment stewardship team evaluates shareholder proposals on a case-by-case basis, and analyzes whether they address a material risk to shareholder returns, are appropriately crafted to avoid dictating company strategy or operations and are in the best long-term interests of shareholders."
A spokeswoman for BlackRock, Amanda Friedman, referred Financial Planning's inquiry to a section of the latest annual
Out of 200 proposals between July 2021 and June 2022, the company voted for 19% because they were "in the financial interests of long-term shareholders." At least 57% of the proposals were covering an idea that a company had already implemented or in which it was making progress, while the others BlackRock voted against were either "too prescriptive/immaterial" (16%), not beneficial to shareholders (5%) or nixed by independent fiduciaries for unstated reasons (3%).
"Many of these shareholder proposals were, in our view, overly prescriptive or constraining on companies, and we did not believe that they promoted long-term shareholder value," according to the report. "BlackRock believes that a diverse and inclusive workforce contributes to a company's ability to innovate, adapt and be attuned to the customers and communities it serves."
The political dynamics,
The Wealth Consulting Group,
Some financial advisors may not yet grasp the importance of ESG simply "from a business perspective, just playing defense" against potential competitors for the growing number of investors interested in screens for impact, Lee said. Acknowledging that "some clients may be confused at some of the things they see on the headline news," he predicted that ESG investing will continue to grow "because it's the right thing to do."
"There are really good business reasons behind it," he said. "No matter what's going on right now, the overall trend for ESG is not going to stop."
Corporations
"We're continuing to see that some of these corporate performances are not matching the rhetoric," Shepard said. Her group's research and other reports "show us the data as to why racial justice and racial equity need to be considered within our investment strategies and across the board," she added.
To see how the largest asset managers voted on shareholder proposals on racial equity, worker rights and technology firm oversight in last year's proxy season, scroll down the slideshow.
For analysis of the largest publicly traded firms' records on racial equity,
Note: The below scores come from the report titled "
The data includes scores for the following firms, which are listed by their most commonly used name among industry professionals: Amundi Asset Management, BlackRock, BNY Mellon Investment Management, Capital Group's American Funds, Fidelity Investments, Franklin Templeton Investments, Goldman Sachs Asset Management, Invesco Advisors, JPMorgan Asset Management, Legal & General Investment Management, Morgan Stanley Investment Management, Northern Trust Investments, Nuveen Asset Management, Pacific Investment Management (PIMCO), Prudential's PGIM, State Street Global Advisors, T. Rowe Price Group, UBS Asset Management, Vanguard Group and Wellington Management.
