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Aspiration and reality: ZHAW Center for Global Competitiveness examines sustainability orientation of asset managers

Together with the Investor Impact Initiative, rezonanz and the Ethos Foundation, Dr. Siyana Gurova from the ZHAW Center for Global Competitiveness evaluated the voting behavior of asset managers at company AGMs in 2023 and compared it with the general views of asset owners on sustainability issues.

The Investor Impact Initiative, in collaboration with the Ethos Foundation, is today unveiling the results of its ground-breaking quantitative evaluation of asset managers’ proxy voting alignment with sustainability goals. In other words, asset managers’ support for items on the agenda, extending from shareholder resolutions to board elections at companies with insufficient sustainability strategies, aimed at improving companies’ practices and management of climate and environmental issues.

Developed with proxy voting data from Zurich stewardship start-up rezonanz and research from Dr. Siyana Gurova from the ZHAW’s Center for Global Competitiveness, the ‘Voting for Sustainability Ranking’ scrutinises the voting behaviour of 13 leading asset managers in Switzerland and beyond and focuses on nearly 700 pivotal sustainability-related decisions at 2023 company meetings worldwide. Amidst growing agreement on the critical role of investment stewardship to investor impact on corporate sustainability, this ranking casts a spotlight on the power of asset managers' decisions in company meetings in shaping economic outcomes. 

The authors used Ethos' voting recommendations as a benchmark to define sustainability-oriented voting. The more similar an asset manager's votes were to those of Ethos, the higher its score, suggesting that the asset manager was more inclined to actively exercise the voting rights to support proposals relating to ESG issues (or vote against board members at companies with insufficient sustainability strategies) and thus seek to improve companies' sustainability performance. "The Ethos recommendations represent the most widely accepted definition of what it means to exercise voting rights in favour of sustainable development in Switzerland today", explains Eleanor Willi, founder of the Investor Impact Initiative.

The results of this first study are clear: while the differences between the top five asset managers are small, there is a significant gap between their results and Ethos' voting positions. This distance illustrates the often-discussed gap between the preferences of asset owners--generally in favour of sustainability--and the votes cast on their behalf by asset managers.

Source: Ethos Foundation