Heavyweights BlackRock, JP Morgan Asset Management failing to boot directors on climate, Market Forces finds

Investor heavyweights are failing to hold board directors of coal, oil and gas companies to account for their climate performance, with an average of more than 95 per cent of shareholder support when it comes to elections.

Ahead of annual meetings for some of Australia’s biggest oil players including Santos and Woodside, research from Market Forces shows there has been no downward trend in support for company directors despite companies with major fossil fuel expansion plans falling short of investors’ climate disclosure expectations.

Market Forces chief executive Will van de Pol said the findings contradict claims from investors that they are driving improved climate governance through active ownership: using their rights as a shareholder to improve corporate behaviour.

“It’s very concerning that the world’s biggest investment firms are failing to live up to their ‘active ownership’ claims when it comes to managing immense climate-related financial risks,” he said. “Directors of companies continuing to exacerbate climate risks by expanding the scale of the fossil fuel industry must face the credible threat that they will be voted off boards.”

Since the launch of the Climate Action 100+ (CA100+) Net Zero Company Benchmark Disclosure Framework – aimed at ensuring the world’s largest corporate greenhouse gas emitters take action on climate change – seven years ago, there has been no notable correlation between a company’s climate performance and voting support for the election of its directors, according to Market Forces’ findings.

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The analysis examined director votes at 45 coal, oil and gas companies with some of the largest fossil fuel expansion plans, comparing levels of director support at each company against their performance on the CA100+ benchmark. It found that directors at companies failing to meet any criteria received higher support in 2023 than those who partially or fully met them.

“What that tells us is big investors are routinely failing to deploy one of the strongest tools at their disposal to actually bring companies into line on climate change,” van de Pol said, calling out BlackRock, State Street and JP Morgan Asset Management as having some of the worst records for voting in favour of fossil fuel directors.

A BlackRock spokesperson said the company voted in line with what it thought was in the best long-term financial interests of its customers.