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State Street Global Advisors (SSGA) almost doubled the number of engagements it held with portfolio companies on climate change in 2021 compared to the previous year, according to the fund manager’s 2021 asset stewardship report.
In the Monday report, the $4.14 trillion fund manager reflected on the 21,000 meetings and more than 190,000 proposals it voted on in 2021.
In 2021, it was “more urgent than ever before” to respond to the growing climate crisis, SSGA said. As such, the fund manager engaged with 254 companies on climate change, almost double that of 2020. This year, the fund manager intends to launch a targeted campaign to “encourage the most significant carbon emitters” to disclose their climate transition plans.
SSGA is “concerned” about the risk posed by companies “brown-spinning,” which refers to investment firms reducing the carbon exposure of their portfolios by selling the highest-emitting components to private equity, hedge funds, and other actors. This practice can “reduce disclosure” and “shield polluters from scrutiny,” SSGA said.
“To drive positive change, we believe engagement with companies on emission reduction rather than divestment is a critical lever for long-term change,” the report reads.
Diversity, equity, and inclusion (DEI)
SSGA engaged with 220 companies on their DEI practices in 2021 and has set stringent new expectations for future engagements.
Since the launch of the fund manager’s Fearless Girl campaign in 2017, which seeks to enhance gender diversity on boards, 948 of the 1,548 companies targeted have added at least one female director to their boards.
In 2022, SSGA expects all companies internationally to feature at least one woman on the board. Beginning in the 2023 proxy season, the fund manager will expect boards to comprise of at least 30% female representation in major indices in the U.S., Canada, U.K., Europe, and Australia.
Last year, SSGA also increased its focus on social equity, developing new guidance on board racial and ethnic diversity. For 2021, the fund manager made clear its expectation that if a company in the S&P 500 or FTSE 100 did not disclose its racial or ethnic composition, it would vote against the nominating and governance committee chair.
Starting this year, SSGA will vote against the nominating and governance committee chair where an S&P 500- or FTSE 100-listed company does not feature at least one director from an underrepresented community on its board.
SSGA engaged with 851 companies in 2021 on their governance, the same number as the previous year.
In 2021, SSGA started to take voting action against board members at companies in the S&P 500, FTSE 350, ASX 100, TOPIX 100, DAX30, and CAC 40 indices that were “laggards” based on their R-Factor score, the fund manager’s proprietary responsible investment scoring mechanism.
Starting this year, SSGA is voting against companies that show a downward trend in their R-Factor scope, as well as those that consistently underperform their peers in the same market sector.