State Street Confirms Voting "Choice" Clients Cannot Opt-Out Of ESG
State Street's ESG head confirmed that its new voting choice program does not allow investors to "opt-out" of sustainability engagement objectives,?Responsible Investor?reports. Instead, clients can choose the "intensity" with which they want State Street's stewardship team to pressure corporate America on climate goals.
The New Program:?Last month, State Street announced a?twin-track stewardship?program including a standard service and a new "Sustainability Stewardship Service" to "support those clients who wish for more active engagement on sustainability topics." At the time, State Street claimed it wanted to "provid[e] our clients with choices." As more details have emerged, however, it appears these choices are limited to different flavors of climate-focused engagements.
A Unified Pro-Climate Message:?Per the article, State Street's standard engagement team and the new sustainability stewardship team will deliver the same message to corporate America. They will attend engagement meetings together and take care to "avoid[] 'mixed messaging' on expectations.'" Per the outlet:
[State Street ESG Head Karen] Wong is also keen to emphasise that the firm's approach in its non-sustainability focused stewardship will not change, despite concerns that the new offering could mean it takes a step back in ambition. The global voting and engagement policy, as before, will consider sustainability issues...
In other words, investors now have a choice between sustainability-focused stewardship and super-charged sustainability-focused stewardship.
No Opt Out:?To underscore State Street's devotion to ESG, Wong confirmed that State Street had "no plans" to "introduc[e] a service for clients who would like to opt out of any kind of stewardship on sustainability issues."
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No Choice:?State Street's new program proves a single asset manager cannot successfully offer different stewardship options. Logically, there are only two possibilities: Two engagement teams can either deliver the same message or different ones. If they deliver the same message, there's no choice involved. If they deliver different messages—say, one team tells Exxon to drill and one tells Exxon to stop—the engagement makes no sense, serving no one.?
Criticism Mounts:?State Street is not the first firm to take heat over self-described voting choice policies. Last year, the Wall Street Journal criticized?BlackRock?along similar lines, explaining that "BlackRock's 'voting choice' initiative recalls Henry Ford's famous line that a customer can have a car pained any color as long as it's black." Strive has also highlighted these concerns, including in an interview Strive General Counsel Alexandra Gaiser gave to?The Daily Signal?earlier this year.
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Applications Staff Engineer - Power Electronics & Analog Signal Path
6 个月Financial planners focusing on ESG equities ought to be fired by their clients for not abiding by their fiduciary obligation.
Research Fellow with the Law & Economics Center at George Mason University’s Antonin Scalia Law School and member, Editorial Advisory Board, Journal of Corporation Law
6 个月Yes, it all marketing BS until beneficial investors are given the option to simply vote with mgt on all issues. ?This option would give investors the right to vote with the advice of those who are the most informed. ?What is State Street and Blackrock afraid of? ?
No Nonsense financial advice for Free Thinking, Freedom Loving people | Founder of hbria.com | Professor
6 个月What does that mean for common sense investor? Means that you need to divest from SPDRs and switch to managers that support your values and not ESG mafia