Vanguard merely backed up only 2% of shareholder resolutions on environmental and social issues at US firms in 2023, slipping from 12% in 2022, according to the top mutual fund manager on Monday, fueling a dip in net investor backing.
Vanguard mentioned that the reduced support reflected a growing number of proposals (359 this year, compared to 290 last year), together with improvements in company disclosure that it said created many unnecessary resolutions.
With $8.2 trillion under management, Vanguard, based in Pennsylvania, has become a leader in determining whether firms should take initiatives such as reducing greenhouse gas emissions or assessing workforce diversity.
Backing for shareholder resolutions asking for such actions has fallen in the United States this year, with leading asset management firm BlackRock reporting that it supported the primarily advisory measures only 7% of the time, compared to 22% last year.
Vanguard’s fall in support was more precipitous. Vanguard, like Blackrock, emphasized new securities regulations that make it difficult for firms to leave queries off their ballots. According to Vanguard, in a note on its website, several resolutions requested modifications that may have been unnecessary.
“In some cases, we identified that although a proposal raised a material risk at the company in question, the board had already demonstrated appropriate oversight of the risk and evidenced its oversight through robust disclosure or had practices in place that substantially fulfilled the proposal’s request,” Vanguard said.
Conservative US lawmakers have accused Vanguard and BlackRock of overemphasizing sustainability issues, while leftist campaigners claim the businesses do too little to address global issues.
Vanguard, like BlackRock, did not address how the criticism might have influenced votes this year but stated that its approach to analyzing shareholder recommendations “has been consistent over time.”