Proxy voting for the Earth System: Institutional shareholder governance of global tipping elements

Global “tipping elements” such as large forest biomes are critical for climate stability, and are key resource pools for extractive industries – typically, forestry and farming. In recent years the largest global asset managers have begun promoting sustainability policies among their portfolio companies, while evidence suggests that financial institutions can influence change in forest biomes through shareholdings. We explore this potential by studying proxy voting by large financial institutions in corporate annual general meetings (AGM), according to institution type and emphasising the largest asset managers, the “Big Three”. We analyse over 180,000 votes relating to ecological sustainability, across 597 AGMs in 263 companies, from 2010-2019. Results indicate that pension and sovereign wealth funds lead in supporting these resolutions, particularly in deforestation categories (around 75%). Asset managers support these resolutions less (approximately 25% of votes), while the “Big Three” average lower (between 6-20%). We recommend further research into asset managers, “universal owners” and proxy advisors in particular, as they are dominant, closely related actors in global finance, and therefore crucial for responsible Earth system governance.

Keywords: corporate environmental governance, global tipping elements, institutional shareholders, proxy voting, Sustainable development, telecoupled systems

Golland, A., V. Galaz, G. Engstrom, and J. Fichtner. 2022. Proxy voting for the Earth System: Institutional shareholder governance of global tipping elements. SSRN Electronic Journal .