Banks and insurance companies involved in asset management are condoning environmentally and climate-damaging activities by companies in which they have a stake, criticizes Greenpeace. They are not taking their responsibility seriously, it concludes.
With the start of the 2024 AGM season, Greenpeace Switzerland has published an analysis of the voting behavior of ten of the largest asset managers operating in Switzerland. The environmental organization took a random sample and examined ten of the votes cast in 2023 by companies that, according to Greenpeace, would exacerbate the climate crisis and destroy biodiversity with their business activities. The analysis makes it clear that banks and insurance companies are not taking their responsibility to protect the natural foundations of life, on which the economy and human life as a whole are based, seriously.
Strategies contradict the Paris Climate Agreement
Greenpeace cites UBS's asset management, which, for example, refrained from supporting a shareholder proposal that would have obliged the Royal Bank of Canada to limit the financing of oil and gas extraction, in particular tar sands mining. What's more, the bank had also confirmed the re-election of various board chairmen who were responsible for climate and environmentally harmful corporate strategies - including the chairman of ExxonMobil. BlackRock, on the other hand, even voted against a shareholder initiative calling on Amazon to disclose its total plastic consumption and plans to reduce plastic. Another example is Swisscanto, which voted in favor of TotalEnergies' climate strategy even though it contradicts the goals of the Paris Climate Agreement.
Pension assets are also invested in environmentally harmful activities
Greenpeace also shows that the asset managers included in the analysis (UBS, Credit Suisse, Pictet, Vontobel, Swiss Life, Swisscanto, Lombard Odier, BlackRock, AXA and GAM) invested the funds they managed, including 2nd and 3rd pillar pension assets, in environmentally harmful activities. They would not question these activities at the general meetings of the invested companies and would refrain from obliging the companies to reduce their emissions and their consumption of nature. Instead, the asset managers favored a short-term profit logic.
Commitment is not consistently reflected in voting behavior
At the same time, asset managers would promise to make the companies in which they invest more sustainable through active ownership (also known as investment stewardship). They would also publicly commit to supporting international agreements to protect the climate and biodiversity. However, this commitment is not consistently reflected in the voting behavior of asset managers at general meetings.
Asset managers act opaquely
In addition, many of the asset managers surveyed did not disclose what measures they would take to hold the boards of directors of the invested companies accountable if they did not achieve the sustainability targets. Worse still, there were asset managers who would not publish the reasons for their voting behavior. Vontobel's asset management, for example, has not yet published its voting behavior from 2023, despite requests to do so.
An effective signal is dispensed with
This lack of transparency would mean that asset managers would fail to send an effective signal to those responsible for a company with regard to the expected climate and environmental protection. This also makes it very difficult for investors to see whether their assets are being managed in line with the sustainability commitments made by banks and insurance companies, criticizes Greenpeace. «The results of our analysis are worrying», says Niki Vischer, an expert on sustainable finance at Greenpeace Switzerland and co-author of the report. She continues: «Anyone who owns shares in a company becomes a co-owner of the company and must then take responsibility for the consequences of its business activities. Asset managers make investments on behalf of investors and exercise the corresponding shareholder rights.»
Asset managers must assert their influence
«Asset managers must exert their influence», agrees Peter Haberstich, an expert on sustainable finance at Greenpeace Switzerland. And he adds: «They must oblige the companies they invest in to pursue strategies that are in line with the goals of the Paris Climate Agreement and the Convention on Biological Diversity. We expect that their green promises will not remain lip service and that asset managers will quickly turn their words into action. The 2024 AGM season is now open. This is an opportunity for asset managers to change their voting behavior and commitment.»
