(Bloomberg) — About 40,000 particular person traders in Vanguard Group’s index-tracking funds participated in a pilot program that allowed them to make their viewpoints recognized on necessary points dealing with shareholders.
Roughly 25% of them opted to vote their shares in keeping with suggestions from proxy adviser Glass, Lewis & Co. on ESG-related points equivalent to higher local weather disclosures. In contrast, the overwhelming majority of members within the pilot determined to stay with regardless of the corporations or Vanguard’s stewardship staff have been advocating.
Within the newest proxy season, Vanguard reported that it didn’t again any environmental or social resolutions filed by exterior shareholders. The outcomes point out this system had little sway in altering the general vote depend because it pertains to ESG issues throughout a interval of Republican-led pushback in opposition to the funding technique.
John Galloway, Vanguard’s world head of funding stewardship, mentioned this system has succeeded in giving shoppers a voice within the voting course of. The agency plans so as to add extra US fairness index funds over time, in order that extra particular person traders can “align their funding portfolios with their private preferences,” he mentioned.
“We’re dedicated to persevering with to empower traders by increasing entry to the proxy voting course of,” Galloway mentioned.
The pilot program was open to a complete of two million particular person traders in 5 fairness index funds which have mixed property below administration of greater than $100 billion.
One of many funds included was the Vanguard ESG US Inventory exchange-traded fund (ticker: ESGV). Greater than three quarters of the ETF’s traders who participated within the pilot program backed Glass Lewis’s steering, Galloway mentioned. The instance reveals how traders with particular pursuits are making their positions heard by means of the proxy course of, he mentioned.
Within the pilot, traders got 4 choices: They might vote in accordance with what the businesses’ boards are recommending; they might help what Vanguard’s stewardship staff is advocating; they might resolve to not vote in any respect; or they might again Glass Lewis’s stance on environmental, social and governance shareholder resolutions.
Vanguard mentioned Tuesday that 30% of the 40,000 traders opted to stay with the businesses’ suggestions, 43% went with Vanguard’s staff, 2% determined to not vote and 24% aligned their voting with Glass Lewis.
“Vanguard is exhibiting that it’s giving its shoppers choices and never forcing them to easily comply with the agency’s voting coverage,” mentioned Rob Du Boff, senior analyst at Bloomberg Intelligence. “The truth, nevertheless, is that it’s having little influence for now on altering the general vote tally.”
BlackRock Inc. and State Road International Advisors additionally enable traders in index funds to direct the proxy voting of their shares. Shoppers representing greater than $630 billion of property below administration are taking part in BlackRock’s Voting Alternative program and the agency mentioned it’s increasing its stewardship choices.
Like at Vanguard, the approval of environmental and social proposals declined at BlackRock. The agency voted for 4% of the proposals within the 12 months ended June 30, down from 7% a yr earlier.
Learn Extra: BlackRock Cuts Backing for Local weather, Social Shareholder Proposals
The drop in help represents “a yawning hole between what many main asset house owners suppose and the way massive managers are voting on resolutions,” mentioned Heidi Welsh, govt director of Sustainable Investments Institute. “It’s not like local weather change administration has develop into much less materials within the final two or three years, or that basic demographic shifts that drive human capital and variety administration have modified.”