The world’s fourth-largest asset manager, State Street, is putting listed companies on notice to take clearer action on climate change and ensure more women are promoted to board positions.
State Street Global Advisors (SSGA) controls around US$4 trillion in shares across significant companies in the United States, Australia, Canada, Europe, and the United Kingdom, and along with BlackRock and Vanguard, hold around 88 percent of the S&P500.
Cyrus Taraporevala, president and CEO of SSGA, said the company would continue using its voting power to push for action on environmental, social, and governance (ESG) initiatives, including climate change.
“We have arrived at an important juncture on the journey to net-zero,” he wrote in a proxy letter to shareholders.
“While more companies are making net-zero commitments, with over one-fifth of the world’s 2,000 largest public companies having committed to meet a specific target,” he said. “Few have provided a clear roadmap to achieve these goals—and fewer asset managers have provided detail on what they expect these companies to disclose as they prepare for this historic transition.”
Taraporevala said SSGA was seeking “pragmatic clarity” on how companies would plan to meet their net-zero targets and warned against “brown-spinning”—the practice of selling off emissions-heavy assets to other entities at a discount.
“The end result reduces disclosure, shields polluters and allows the publicly-traded company to appear more ‘green,’ without any overall reduction in the level of emissions on the planet,” he said.
“Asset managers such as State Street have an important role in helping companies across the spectrum effectively plan for this transition and be a part of the climate solution,” he added, conceding that the transition to net-zero would be gradual and not an “improbable immediate shift.”
The latest instructions from SSGA come despite oil and gas stocks outperforming ESG companies in 2021, with the stock prices for ExxonMobil, ConocoPhillips, and Chevron soaring.
The investment giant, meanwhile, also issued a challenge for all listed companies to have at least one woman on their board of directors and said that from the 2023 proxy season, all businesses on major indices in the United States, Canada, United Kingdom, Europe, and Australia must ensure that 30 percent of their boards are comprised of women.
“We expect this change to result in boards with three or four female directors on average and as many as 3,000-to-4,000 additional female directors across covered indices,” Taraporevala said.
“We are prepared to vote against the Chair of the board’s Nominating Committee or the board leader should a company fail to meet these expectations,” he added.
The SSGA CEO also warned that voting action would be taken against directors in the U.S.-based S&P500 and the UK-based FTSE 100 if they do not have one person of colour on their board or fail to disclose the racial and ethnic diversity of their directors.
SSGA’s letter comes as major investment funds continue spearheading ESG initiatives across Western corporations. The movement is grounded partly in the actions of student activists in the 1970s, according to Stephen Soukup, author of The Dictatorship of Woke Capital: How Political Correctness Captured Big Business.
Beginning in college campuses about 35 years ago, students upset that their universities had investments in South Africa, which was then operating apartheid, began pressuring administrators to divest from South Africa.
Soukup said this later morphed into socially responsible investing, where investors could set up screens to block companies that didn’t align with their values.
“Within the last 10 years or so, the new version of socially responsible investing, which goes by the initials ESG, began to be slightly more aggressive and has grown more and more aggressive as time has gone by,” Soukup told The Epoch Times’ “Crossroads” program.
“This has become sort of the de facto way to achieve social ends within this community of professional investors, who have moved significantly to the left over the past quarter-century,” he said.