Economy

ESG fund groups leading on shareholder Democracy voting changes

By David Callaway, Callaway Climate Insights

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

LONDON (Callaway Climate Insights) — We have a long way to go before investors in mutual funds and exchange-traded funds can vote on corporate resolutions of companies they own indirectly.

But many believe it’s important we start down that road, as I discussed in a column two weeks ago. That’s when I reported on research that found shareholder democracy, coupled with even a small measure of concern for the environment, could — in theory — have a big impact on the climate policies of publicly-traded corporations.

For this column, I focused on how far apart theory and practice are on this crucial question.

Currently, the only way that most of us can vote on corporate resolutions is if we directly own the shares of that corporation. That limits our voice, since for almost all investors the vast majority of their equity assets are invested in mutual funds or ETFs that, in turn, invest in individual corporations. Historically, those funds have either not voted on corporate resolutions or largely voted with management.

A number of asset management firms are trying to change this, and here’s a quick summary of some of the major players:…

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