Voting on ESG: A Gap Becomes a Gulf

Key Observations

U.S. support for E&S proposals fell further in 2024. 

• U.S. managers further reduced their backing for environmental and social (E&S) proposals in the 2024 proxy year. Average support by 20 large U.S. firms for significant E&S shareholder resolutions funds fell to 31% in 2024 from a 2021 peak of 54%.
• For the first time in the last five proxy years, U.S. firms’ support for environmental resolutions fell below that for social resolutions, against the backdrop of growing political scrutiny of asset managers’ net zero aspirations.

Stable support by European and U.S. sustainable funds.

• In contrast to the U.S., votes by 15 European firms for the same resolutions was consistently very high, averaging 96% over the last five proxy years.
• Support for these resolutions by 308 U.S. sustainable funds was substantially higher than the 20 U.S. firms’ average. The funds averaged 68% support over five years, peaking at 77% in 2021.
• Unlike the U.S. firms’ average, which fell, average support by sustainable funds was stable in 2024 compared with 2023, at just over 60%.

More U.S. firms decided to cut support in 2024.

• For the second year in a row, most of the 20 U.S. firms we assessed showed a declining trend in support in the 2024 proxy year.
• Columbia Threadneedle, Invesco and State Street substantially cut their support for significant E&S resolutions for the first time in 2024.
• Several other U.S. firms – including BlackRock, J.P. Morgan and Vanguard – cut their support further in 2024 having reduced their support already in 2023.

A Gap Becomes a Gulf

We see a further decline in support by U.S. firms for many E&S proposals that are consistently backed by European and sustainable fund managers.

Number of Sustainability Resolutions With Significant Shareholder Support Fell in 2024

We regularly assess asset managers’ support for significant U.S. shareholder resolutions on environmental and social themes. This can be an important indicator of asset manager’s stance for investors who choose to incorporate sustainability expectations into their investment decision-making and manager selection.

We define significant resolutions as those with at least 30% support from a company’s independent shareholders. There were 107 significant E&S resolutions in the 2024 proxy year, and 598 in the five proxy years to 2024. (See our September 2024 research paper for further information.)

The number of resolutions with significant support has fallen for two consecutive years since peaking in 2022. However, the decline in average support for those resolutions stabilized somewhat at 39% in 2024, compared with 41% in 2023 and 49% in 2022.

Falling Support for Significant E&S Resolutions Appears Specific to Large U.S. Asset Managers

Although average support for significant E&S resolutions started to stabilize in the 2024 proxy year, Morningstar Sustainalytics proxy voting data shows that this occurred despite falling support from the largest U.S. asset managers. The chart across shows average support for significant E&S resolutions over the last five proxy years for 20 large U.S. asset managers and 15 large European asset managers (listed on pages 8 and 9), as well as an aggregate of over 300 U.S. sustainable funds. Average support for the large U.S. firms in 2024 declined at a similar rate to the previous two years, falling to a five-year low of 31%.

As you would expect, the sustainable funds support for E&S resolutions is consistently higher than the U.S. firms’ average over recent years, by around 20–25 percentage points. This gap expanded to over 30 percentage points in 2024. Average support by the sustainable funds remained steady at just over 60% in 2023 and 2024, after mirroring the U.S. firms’ decline for the prior two years.

The European firms’ support for significant E&S resolutions has been consistently very high over the last five years, with an average of over 95%.

Decline in U.S. Firms’ Support for Significant Environmental Resolutions Accelerates

Prior to 2024, among the significant proposals we assess, support for social resolutions was consistently lower than for environmental resolutions. However, in the 2024 proxy year, average support among U.S. firms for significant environmental resolutions (28%) fell below that of social resolutions (32%) for the first time. (Support held at 43% and 38%, respectively, in 2023.) This happened against a backdrop of increasing political scrutiny on U.S. asset managers net-zero commitments that has led many of them to exit collaborative initiatives like Climate Action 100+ and the Net Zero Asset Managers’ initiative.

U.S. sustainable funds’ support for significant environmental resolutions also declined on average from 68% in 2023 to 61% in 2024. Their support for social resolutions increased slightly over the same period from 59% to 62%, lifted by stronger support for votes on political influence and human rights.

After 2023’s Reductions, More U.S. Firms Cut Their Support for Significant E&S Resolutions

The table opposite shows annual support for significant E&S resolutions for the last five proxy years, and the three-year average for the last three proxy years. A firm’s trend in support is described as rising or falling if the most recent year’s support level differs from the three-year average by at least five percentage points.

In the 2022 proxy year, most firms – 13 out of 20 – showed a stable trend in support for significant E&S resolutions. This changed in the 2023 proxy year, when a falling trend was observed at 11 of the 20 firms. There was no return to stability in 2024. Last year, 12 of the 20 firms showed a falling trend in support.

Columbia Threadneedle, Invesco, and State Street were among the latest to show this falling trend. Yet other firms who cut their support for significant E&S resolutions last year extended the decline this year. This includes BlackRock, Charles Schwab, Dodge & Cox, J.P. Morgan, and Vanguard.

Only two of the 20 firms – Fidelity and Nuveen – showed a rising trend in support for these resolutions in 2024.

European Firms’ Support for Significant E&S Resolutions Remains Very High

In contrast to their U.S. peers, the 15 European firms we analyzed showed consistent and very high support for significant E&S resolutions over the last five proxy years. Average support for these firms stood consistently at around 95% to 96%.

We recorded only three substantial changes in voting trends on significant E&S resolutions over the last three proxy years, two of which were in 2024.

Norges Bank Investment Management, Europe’s largest institutional shareholder, increased its support for these resolutions in 2024 to 84%, compared with a three-year average of 78%. However, despite this high level of support, this firm is still the least likely of the 15 institutions to back significant E&S resolutions. Schroders reduced its support to a still-high 89% in 2024, compared with a three-year average of 95%.