Dive Brief:
- State Street supported 6% of environmental proposals and 7% of social shareholder proposals in the first half of 2024, the asset manager reported last week.
- The support for environmental proposals is down from 14% last year for the nation’s third-largest asset manager. The firm did not disclose its standalone social proposal support for the 2023 proxy season, but its engagement on social issues fell from 423 last year to 218 as of June 30 — an over 48% decrease.
- State Street’s proposal approval figures round out reporting from all Big Three asset managers, coming shortly after BlackRock and Vanguard released their proxy votes. All three supported fewer environmental and social proposals than in 2023, as average ESG proposal support fell overall.
Dive Insight:
State Street wrote in its asset stewardship report that its decline in support for environmental proposals is “primarily” due to proposals it viewed as “increasingly prescriptive” or related to issues it believes the company has already responded to. The firm said it supported social proposals around diversity, equity and inclusion; human capital management; human rights and political contributions.
The firm said it voted against environmental proposals this cycle where the company in question received a similar proposal last year and “demonstrated responsiveness.” State Street said it viewed 25% of the environmental proposals it voted on to be too prescriptive.
“Over the past few years, shareholder proposals have also become increasingly complex,” the report said. “While we assess alignment of climate targets with relevant jurisdictional commitments, specific temperature pathways, and/or sectoral decarbonization approaches, State Street Global Advisors is not prescriptive on target setting or target alignment.”
The firm said it supported greenhouse gas emissions-related proposals at companies who “failed to provide adequate disclosure” or didn’t demonstrate appropriate climate-risk oversight. Among those, State Street supported a proposal at fast food restaurant chain Jack in the Box asking the eatery to adopt greenhouse gas emissions standards. That was one of just two environmental-related shareholder proposals to gain a majority vote this proxy season, according to law firm Freshfields Bruckhaus Deringer.
State Street said it voted against social proposals it found too prescriptive or “too niche,” as well as proposals that asked companies to disclose information they were already reporting adequately on that aligned with State Street’s frameworks.
The Boston, Massachusetts-based firm’s voting results fill out a picture of the latest proxy season where the largest asset managers further pulled back their support for environmental and social proposals. Diligent Marketplace Intelligence reported that a record number of ESG proposals were submitted in the first half of 2024, though support fell to 16% — down from 19% in 2023 and a high of 33% in 2021.
BlackRock, the nation’s largest asset manager, supported 4% of environmental and social proposals in the latest proxy season — down from 7% in 2023. Meanwhile, after supporting 2% of such proposals in 2023, Vanguard recently reported not supporting any environmental or social proposals in the 2024 proxy season.
The drop in support aligns with partial-year data from Morningstar Sustainalytics that showed State Street’s support for ‘E’ and ‘S’ proposals was falling. Lindsey Stewart, director of investor stewardship and research for Morningstar’s research arm, previously told ESG Dive that a decline in State Street’s support for environmental and social proposals “would go a long way to explaining the continuing drop in the number of key resolutions.”
Morningstar previously reported that 13 environmental and social proposals received majority support, down from 16 in 2023 and 64 in 2022. The number of such proposals receiving between 40-49.99% support fell from 38 to 24. Slightly more proposals received between 30-39.99% support than in 2023, as 70 proposals fell in this window, up from 64.
