Majority of asset managers voting against biodiversity proposals
Investors are failing to consider or account for risks of nature loss, with the majority voting against strengthening biodiversity proposals across their funds and portfolios, new research has found.
Planet Tracker’s latest Voting against Nature report found that of the 26,587 votes cast on biodiversity proposals across investor funds, 62% were either cast against or not voted on.
The report warns that while 76% of environmental, social, and governance (ESG) funds analysed did support biodiversity proposals, they accounted for less than 3% of the overall votes so had little impact in determining the outcome. Additionally, nearly 20% of self-proclaimed sustainability funds actually voted against biodiversity-related proxies from organisations.
The research found that only 7% of overall votes on biodiversity proxies were able to provide shareholder reasonings for the decision.
Planet Tracker’s director of research John Willis warns that investors and funds need to be more vocal in justifying their voting decisions.
“Following last year’s landmark Global Biodiversity Framework committing the private sector to ambitious nature targets, it’s disappointing to see financiers, particularly those who define themselves as sustainable, continuing to overlook biodiversity and not using their financial might to protect nature,” Willis said.
“With asset managers favouring engagement over divestment as an approach in transforming corporate behaviour, funds must step up and support important biodiversity proposals, or provide justification for their voting decision.”
The research also detailed analysis of three of the top five global asset managers – BlackRock, Vanguard and SSGA. It found that their dedicated sustainability funds voted against biodiversity proposals between 80-100% of the time. Not once did the funds provide rationale for their voting decisions.
For the funds that did disclose voting decisions against biodiversity-related proposals, issues such as being “overly prescriptive”, that it would duplicate corporate reporting, or that it would deliver insufficient shareholder benefits.
By UN estimates, less than $10bn is allocated globally to international biodiversity finance. The organisation recommended last year that at least $8.1trn is provided to nature-based solutions alone – projects which involve the restoration of ecosystems in a way that also enhances climate mitigation and/or adaptation efforts – by 2050.
Without increased finance risks to biodiversity – and, in turn, to livelihoods, public health and the economy – will crystalise. WWF forecast in 2020 that the global cumulative cost of natural ecosystem damages will reach £8trn by 2050. Shortly after that prediction was published, the World Economic Forum released a paper outlining how the economy is more dependent on nature than previously thought, with half the world’s GDP ($44trn) dependent on nature.
Planet Tracker’s research builds on analysis from ShareAction in December 2022, which warned that most of Europe’s largest banks are not considering financial risks relating to nature loss or setting out policies mandating that the businesses they invest in are protecting the environment.
ShareAction found that Europe’s banking sector as a whole is “only just waking up to the biodiversity crisis” and that this topic is not a board-level priority for most firms. The mean average score for climate action across this cohort of banks was 48%, while the mean average for biodiversity action was just 35%.