In a surprising development, environmental support from leading asset managers has seen a decline during the 2023 Proxy season. The two largest asset managers in the world published their voting records in August 2023, causing quite the stir in the legal and financial markets when it was discovered that their backing for climate-related shareholder resolutions had dipped noticeably. The reveal has raised questions and sparked discussions amongst the corporate world, especially among stakeholders concerned about environmental and social governance (ESG).
This decrease is being attributed by the asset managers to the poor quality of resolutions or their excessively restrictive nature. It appears that these factors have deterred the asset managers from lending their support to these resolutions. According to Cadwalader, Wickersham & Taft LLP , the lack of robust proposals in terms of climate-related resolutions might be a considerable undertone creating friction in the asset management industry.
In contrast, some could interpret this decline as a sign that top asset managers may not be as committed as previously thought to battling the collective issue of climate change. There is a possibility that this could trigger change within the industry towards a more rigorous and detailed process for developing and putting forth climate-related resolutions. In these circumstances, law firms representing large corporations need to be particularly discerning.
Regardless of the underlying causes, the situation calls for a stronger push for improved quality and a less restrictive nature in environmental and social shareholder resolutions. Legal professionals, particularly those working for top law firms and corporations, need to closely monitor the situation and make adjustments accordingly to their strategies. This could mean specifically focusing on the quality of proposals and dialogue around ESG issues in board meetings and shareholder engagements.