A study by Investor Impact Initiative, using Ethos' voting recommendations for the 2023 AGMs as a benchmark to define the sustainability-oriented asset owner position, ranks asset managers on the basis of their orientation towards sustainability. The ranking reveals that a gap remains between the preferences of asset owners, broadly in favour of sustainability issues, and the votes carried out on their behalf by asset managers at AGMs.
The Investor Impact Initiative, in collaboration with the Ethos Foundation, is today unveiling the results of its ground-breaking quantitative evaluation of asset managers’ proxy voting alignment with sustainability goals. In other words, asset managers’ support for items on the agenda, extending from shareholder resolutions to board elections at companies with insufficient sustainability strategies, aimed at improving companies’ practices and management of climate and environmental issues.
Developed with proxy voting data from Zurich stewardship start-up rezonanz and research from the ZHAW’s Center for Global Competitiveness, the ‘Voting for Sustainability Ranking’ scrutinises the voting behaviour of 13 leading asset managers in Switzerland and beyond and focuses on nearly 700 pivotal sustainability-related decisions at 2023 company meetings worldwide. Amidst growing agreement on the critical role of investment stewardship to investor impact on corporate sustainability, this ranking casts a spotlight on the power of asset managers' decisions in company meetings in shaping economic outcomes.
The authors used Ethos' voting recommendations as a benchmark to define sustainability-oriented voting. The more similar an asset manager's votes were to those of Ethos, the higher its score, suggesting that the asset manager was more inclined to actively exercise the voting rights to support proposals relating to ESG issues (or vote against board members at companies with insufficient sustainability strategies) and thus seek to improve companies' sustainability performance. "The Ethos recommendations represent the most widely accepted definition of what it means to exercise voting rights in favour of sustainable development in Switzerland today", explains Eleanor Willi, founder of the Investor Impact Initiative.
A call to asset managers
The results of this first study are clear: while the differences between the top five asset managers are small, there is a significant gap between their results and Ethos' voting positions. This distance illustrates the often-discussed gap between the preferences of asset owners--generally in favour of sustainability--and the votes cast on their behalf by asset managers.
Narrowing this gap is now a priority for both the Investor Impact Initiative and the Ethos Foundation. Ethos regularly encourages its members, mainly pension funds, to raise this issue with their asset managers to encourage them to exercise their voting rights in accordance with their principles and wishes.
In a dynamic market where transparency is paramount, the ‘Voting for Sustainability’ Ranking is not merely a list. “It is a call to action, an incentive for asset managers to attach greater importance to the exercise of voting rights and to recognise the importance of each vote they cast”, explains Vincent Kaufmann, CEO of Ethos.
A transparent tool for assessing and comparing voting practices
For investors, this ranking provides a transparent tool for comparing the ESG commitment levels of both potential and current asset managers, thereby contributing to more informed decision-making. It also highlights the evolving role of asset managers as catalysts for change within the companies in which they invest.
The Investor Impact Initiative plans to expand the application of this methodology global ranking in October, including dozens of additional managers. In the meantime, the full 2023 ranking, the respective distances of the asset managers from Ethos' voting positions and a detailed description of the methodology are available on the rezonanz website: https://rezonanz.io
About the Investor Impact Initiative: Through research and the organisation of educational events, the III seeks to support the global shift towards a focus on impactful investor action with the goal of creating a more sustainable world. Via both application-oriented research and collaboration with academic researchers, the Investor Impact Initiative’s vision is to enable the quantification of investor impact through practical tools.
About Ethos: The Ethos Foundation was created in 1997 with the aim of helping Swiss pension funds to invest in a sustainable and responsible manner. To help it achieve its goals, in 2000 the Ethos Foundation set up Ethos Services, which today offers a range of services dedicated to SRI, as well as investment funds and sustainable stock market indices.
About rezonanz: the mission of rezonanz is to simplify investment stewardship. The Zurich-based company supports responsible investors seeking greater effectiveness in their voting and engagement activities with novel data, proprietary models and interdisciplinary frameworks. A majority female-owned company combining sustainability expertise with interdisciplinary insights from data science, finance and political science, the company’s vision is to increase the impact of investors’ sustainable stewardship and long-term value creation efforts.
About the ZHAW Center for Global Competitiveness: CGC is an academic and consulting institution dedicated to exploring the intricate nexus between corporations and their broader international context, encompassing economic, political, and social dimensions.
