Methods

We used the Investment and Pensions Europe ranking of the largest 500 asset managers as an initial list from which we selected asset managers[1]. As a UK-based charity, we wanted to assess the largest asset managers worldwide as well as the largest European and, specifically, UK asset managers. We therefore selected a list comprising:

1. The world’s largest 35 asset managers based on AUM
2. The next largest 35 European asset managers based on AUM
3. The next largest 12 UK asset managers based on AUM

Organisations on this list were excluded if they were:

1. Predominantly acting as investment consultants
2. Wholly or predominantly focused on fixed income
3. Predominantly providing currency management and advisory solutions
4. Predominantly focused on alternative asset classes such as real estate and private equity
5. A parent company of an independent investment affiliate already included
6. Data was not available from public disclosure or the Insightia data platform

In total, 82 asset managers were initially selected for analysis. Data on holdings and votes cast was sourced from Insightia’s voting database[2].

To ensure that we had sufficient data to calculate representative scores for each asset manager, we excluded asset managers where more than 90% of voting data points were not useable (because the manager had no holdings or we did not have any data for that vote). This gave us a final dataset of 68 asset managers, split regionally as follows:

1. The world’s largest 29 asset managers based on AUM
2. The next largest 29 European asset managers based on AUM
3. The next largest 10 UK asset managers based on AUM

We gave all asset managers the opportunity to verify the data and, of the 68 asset managers, 61 returned verified datasets to us. The seven asset managers who chose not to verify the data were: American Century Investments, Coronation Fund Managers, Morgan Stanley Investment Management, Nuveen Asset Management, PGGM Investments, State Street Global Advisors and Vontobel Asset Management.

As well as voting data, asset managers were asked to provide their voting rationales. Only some asset managers provided these, and therefore rationales discussed in this report have been anonymised.

We selected shareholder resolutions that we confidently believe would improve companies’ social and/or environmental impact, or require the disclosure of information useful for investors. Throughout the selection process we took measures to ensure that only well-conceived and well-written resolutions were chosen. Therefore, all the resolutions against which asset managers were scored and ranked are ones we believe asset managers should vote for. A full list of shareholder resolutions can be found in the List of Resolutions.

We compiled an initial list of resolutions voted on this proxy season using several sources:

1. Insightia database[3]
2. Interfaith Center on Corporate Responsibility 2022 list of resolutions[4]
3. ShareAction’s Resolutions to Watch[5]
4. Ceres[6]
5. Australasian Centre for Corporate Responsibility (ACCR)’s Say on Climate briefing[7]
6. Say on Climate initiative website[8]
7. Climate Action 100+ flagged resolutions[9]

From this list, we removed resolutions that were poorly written and/or filed by groups linked to corporate lobbying campaigns. We also removed resolutions where there was no accessible information on the filer and wording. Before excluding these resolutions, we read through them to understand the full breadth of issues being raised to inform our analysis and discussion. Excluding these resolutions was important to ensure that the resolutions on which the asset managers were assessed were all resolutions we believe investors should support.

We then kept resolutions where the topic was relevant to our analysis (Figure 22). The final list, excluding the Say on Climate resolutions, comprised 252 resolutions, filed in 10 different countries (Figure 23).

Say on Climate resolutions

Both management-sponsored and shareholder-sponsored Say on Climate resolutions were removed when calculating asset managers’ overall scores and ranking. Thirty-six resolutions were selected using the Insightia database, Ceres, ACCR’s Say on Climate brief and sayonclimate.org. Thirty were management-sponsored and six were shareholder-sponsored resolutions. Both kinds were removed when calculating asset managers’ overall scores and ranking.

See Chapter 6 for an explanation of why Say on Climate resolutions were excluded from our ranking exercise, and the List of Resolutions for a list of the Say on Climate resolutions analysed.

Estimating support percentages

Only votes ‘for’ were included when calculating the overall percentage of ‘for’ votes for ranking purposes. Neither abstentions nor ‘Did Not Votes’ were treated as ‘for’ for the reasons outlined below.

The support percentage was therefore calculated: votes in support / (votes in support + votes against + abstentions + DNV + split votes). Asset managers were not penalised for not holding shares in a company, having missing data, or for not voting in a shareblocking market.

Abstentions and Did Not Votes

Some asset managers prioritise their voting activity depending on what percentage a company takes up in their portfolio overall. The asset managers included in the study are the largest globally and therefore should be voting across all shares they own. Not voting sends a signal to companies that there is a lack of interest from investors. The methodology therefore considers Did Not Vote as equivalent to a vote against the resolution.

Abstaining sends a similar signal to management that the investor does not actively support the resolution. In calculating asset managers’ scores, abstentions were also not considered as support for a resolution.

Split votes

There are three reasons why asset managers listed split votes: individual fund managers may have responsibility for voting decisions (for example, for sustainable/ESG funds), a portion of votes may have been directed by clients, or voting decisions may be split across multiple investment arms. When collecting information, we instructed asset managers to provide a house view of how the asset manager voted at the particular resolution.

Split votes were counted as ‘for’ where over 75% of the assets held in the company voted in favour of the resolution. Otherwise, they were left as ‘split’ when calculating the support percentage (see above). Due to data limitations, we were unable to weigh all the split votes against the AUM held in a company. These votes were left as ‘split’ when calculating the support percentage. All three types of split votes have been accounted for through instructions to managers and the thresholds applied.

While we support client-directed voting, we recommend that asset managers also establish house views to avoid different portfolio managers within a firm voting differently.

Data analysis

Some of our analysis compared the average score between two groups of asset managers or two groups of resolutions. However, it is not possible to tell how much the two groups overlap from the average scores alone. In these cases, where we report that the averages of two groups are different, we have checked the spread of the data to confirm that there was an underlying difference between the groups.

We gave all asset managers the opportunity to verify the data and, of the 68 asset managers, 60 returned verified datasets to us. The eight asset managers who chose not to verify the data were: American Century Investments, Coronation Fund Managers, Morgan Stanley Investment Management, Nuveen Asset Management, PGGM Investments, State Street Global Advisors, Veritas Asset Management and Vontobel Asset Management.

References

[1] IPE (2022) Top 500 Asset Managers | Investments and Pensions Europe. https://www.ipe.com/reports/to....

[2,3] Insightia (undated) The home of shareholder activism, investor voting, and corporate governance data. https://www.insightia.com/.

[4] Interfaith Center on Corporate Responsibility (2022) ICCR’s 2022 Proxy Resolutions & Voting Guide.

[5] ShareAction (2022) ShareAction’s resolutions to watch 2022. https://shareaction.org/shareh....

[6] Ceres (2022) Climate and Sustainability Shareholder Resolutions Database. https://engagements.ceres.com.

[7] Gocher D, Deutsch F (2022) ACCR Briefing: Say on Climate Voting in 2021.

[8] Say on Climate (2022) Shareholder Voting on Climate Transition Action Plans. https://www.sayonclimate.org/.

[9] Climate Action 100+ (2022) Climate Action 100+ Flagged Shareholder Votes. https://www.climateaction100.o....

All links accessed in November 2022.