Biggest US index funds oppose most climate proposals in shareholder votes

Reticence of BlackRock Inc and Vanguard Group draws criticism from investors and climate activists

WASHINGTON: The far-reaching impacts of climate change on companies have investors pressing corporate leaders for action to minimise environmental damage and to maximise disclosure of risks to their businesses. The threats range from more frequent floods or wildfires that imperil major assets to regulations that could undermine profits.

While votes on climate-related shareholder resolutions often take centre stage at corporate annual meetings, they seldom draw support from the two top US index fund firms, BlackRock Inc and Vanguard Group. The reticence of the two largest index fund providers to back these proposals draws criticism from some investors and climate activists.

BlackRock sometimes criticises the quality of the climate-change proposals offered by others, but the world's largest money manager and its top rivals have not put forward any proposals of their own since at least 2001, according to research firm FactSet.

"The investors who should be the leaders have so far been the laggards," said Rob Berridge, director of shareholder engagement at Ceres, a Boston-based research and advocacy group focused on sustainability issues.

Their limited support for other shareholders' climate-related proposals highlights a broader pattern of deference to management at the companies in their stock portfolios, according to a Reuters analysis of their proxy voting records.

The top index fund firms say they prefer to address issues they have with portfolio companies, including those related to climate change, in private talks with executives rather than through shareholder votes. Vanguard Governance Chief Glenn Booraem said such votes don't tell the whole story of its advocacy on climate issues.