At the end of 2009, mutual funds owned nearly a quarter of all publicly traded stocks in the U.S., according to the most recent figures available from Washington, D.C.-based Investment Company Institute. Such a large footprint in the equity market makes for hefty representation by mutual funds when it comes to voting on resolutions in companies’ proxy ballots.
Cognizant of this outsize influence, Boston-based Ceres – a coalition of investors, environmental groups and other public interest organizations working with companies to address global sustainability challenges – has been tracking mutual funds’ voting patterns on climate change-related resolutions for the past seven years. Earlier this month, Ceres released its 2010 report, and lamented that for the first time in several years, mutual fund support for climate change-related resolutions had declined.
The report analyzed the 2010 proxy votes of 46 mutual fund firms, collectively managing approximately $6 trillion. Overall, the fund support for climate resolutions – i.e. calls for sustainability reports and greenhouse-gas emission reduction goals – dropped to 24 percent in 2010 from 27 percent in 2009, after rising steadily the previous three years. Some major mutual fund firms, like AllianceBernstein, American Funds, State Street and Vanguard, didn’t support a single climate-change related resolution. The report pointed to a couple of firms – Schwab and Nationwide – whose support for climate change resolutions dropped precipitously in the 2010 proxy season compared to 2009.
One possible reason for the dampened support, the report’s writers point out, could be the fact that during the 2010 proxy season, prospects for the near-term passage of a U.S. climate-change bill faded completely. Once the spectre of regulatory change around climate issues had lifted, mutual funds may have considered such issues less relevant.
