Climate Action 100+: More exits, more questions

Two more asset managers exit the engagement initiative, raising further questions about its future in the US.

Two further exits from the collaborative climate engagement initiative Climate Action 100+ have captured the headlines today. As reported by Responsible Investor, Allspring and AllianceBernstein decided to exit CA100+ in May.

This adds to the departures of four other US-based managers – Invesco, J.P. Morgan, Pimco and State Street – earlier this year. BlackRock also announced a partial withdrawal from CA100+ for its US asset management business.

I analyzed the context of the exits in a Morningstar research paper in early April, also covered in this newsletter.

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As I noted back then, several of those managers "have said that they’re heading in a different direction generally on how they plan to engage, they say they built up their teams and they have no need to do collaborative engagement anymore."

But the rising political pressure in the US, coupled with accusations of a breach of anti-trust law, will almost certainly have also featured in the overall calculus of each manager's decision to exit.

The research paper showed that the accusations of collusion have no firm basis, at least as far as can be determined by signatory firms' proxy voting records.

The paper analyses institutional investors' voting records on 20 climate related shareholder resolutions flagged by CA100+ for its signatories' consideration in the 2023 proxy year.

I gave further details on the voting outcomes for these proposals in an interview with IR Magazine:

"There was a relatively wide range of support for these proposals... Two of the resolutions featured on our list of well-supported key ESG resolutions with more than 40 percent adjusted support were a request at Berkshire Hathaway for a report on climate-transition risks and opportunities, and one at PACCAR requesting transparency on climate-related lobbying activities. Support for 18 other resolutions ranged from 16 percent to 36 percent. The most successful of these was a request at ExxonMobil for disclosures on methane emissions."

The 50 signatories we reviewed (including the five firms that exited or amended their participation) supported an average 76% of the resolutions. Support by these 50 institutions ranged from as low as 10% up to 100%.

The additional exits will no doubt raise further questions for the initiative's future in the US... Will there be further departures? And if so, who's next?

We also saw that the five firms that exited or amended their participation in CA100+ were themselves taking a wide range of approaches to voting on the 20 proposals.

Voting record on Climate Action 100+ flagged shareholder resolutions

Seven exited/amended CA100+ asset manager signatories, 2023 proxy year

The updated chart above includes the voting records for Allspring and AllianceBernstein on the 20 resolutions. These two firms also varied in their support for the flagged proposals last year, such that the slope of the chart barely changes with their addition.

Allspring supported 11 of the 20 flagged resolutions (55%); AllianceBernstein supported five (25%). For comparison, average support for the 15 US asset manager signatories we reviewed in April stood at 60%.

The additional exits will no doubt raise further questions for the initiative's future in the US, particularly among the asset manager community, whose support for flagged resolutions has been lower than that for asset managers, according to our April research.

First among those questions is: will there be further departures? And if so, who's next?