Geode Capital Management – which runs index-tracking funds on behalf of Fidelity – has historically backed management with its votes more than the other surveyed asset managers, although there were signs that the firm was becoming more willing to challenge the status quo, according to Morningstar.This year BlackRock and Vanguard supported a high profile shareholder resolution at Exxon Mobil against the board’s recommendation. This year was the first that Vanguard had supported a climate-risk disclosure resolution.The growth in index investing has coincided with … Morningstar’s survey work also found an increased commitment to engagement among index managers.“The research shows that index managers have no intention to free-ride with respect to engagement,” the research firm said. “Many are intensifying their efforts in that area.“They also, and perhaps more importantly, intend to improve the quality of their interactions.”Index managers’ corporate governance teams have grown recently, Morningstar highlighted. BlackRock’s expanded from 20 members in 2014 to 33 today, while UBS was to have 11 dedicated professionals employed by the end of this year, up from four in 2015.… increasing interest in responsible investment Passive investing does not lead to an abdication of stewardship responsibilities, investment research firm Morningstar has said.On the contrary, index managers such as BlackRock, Vanguard, and State Street Global Advisors (SSGA) were increasingly taking an active role in the oversight of investee companies, it said.The firm surveyed 12 providers of index funds and exchange-trade funds (ETFs) with over $12trn (€10.2trn) of assets under management in total.It found that nearly all of the providers applied the same stewardship principles to all their holdings, irrespective of whether these were in passive or active portfolios. Hortense Bioy, director of passive strategies research for Europe at Morningstar, said: “Our research shows the largest index managers have stepped up their efforts in the areas of voting and engagement, as they seek to influence investee companies and help improve ESG standards across the board.“However, practices vary significantly among index managers and firms need to be doing more to enhance disclosure and communication to improve public awareness and understanding of their activities.”The costs associated with voting and engagement activities may lead to more differentiation among the managers’ approaches, Morningstar suggested.Large asset managers with economies of scale should be able to absorb the additional costs, but this may be more difficult for smaller firms. These would have little choice but to either do the minimum required or outsource stewardship activities.The benefits of direct engagement seemed more evident for managers that also had an internal active stock-selection business, and less so for the surveyed managers whose mandates were limited to passive and/or quantitative active strategies, such as Schwab and Geode.Note: A previous version of this article stated that Geode Capital Management ran funds on behalf of Fidelity, Vanguard and BlackRock. This article has been updated to reflect that Geode only runs funds for Fidelity.
The state first sought a federal waiver in late 2005, only to have it bog down in the federal bureaucracy. The effort got a boost earlier this month when the U.S. Supreme Court handed down a major environmental decision, ruling the EPA indeed has the authority to regulate carbon-dioxide emissions under the Clean Air Act. The Bush administration had argued that it lacked the authority to do so. Now, California’s request is being re-examined – but it’s far from clear what will happen. The Supreme Court “obliterated” any federal rationale for inaction on global warming, said Karen Douglas, the California climate initiative director for the nonprofit Environmental Defense. But the feds are still stalling. “It’s bad enough that they’ve failed to take meaningful action to combat global warming,” she said. “It’s even worse that they’re putting roadblocks in front of states that are trying to do something.” In Washington this week, congressional Democrats led by California Sen. Barbara Boxer accused Johnson, the EPA administrator, of inaction since the Supreme Court decision. Johnson told a Senate hearing that the EPA would hold a public hearing on California’s request May 22 and would accept public comments until June 15. He did not say whether the state’s waiver request would be ultimately approved. EPA spokeswoman Jennifer Wood said the agency is “moving forward expeditiously with the statutory process for considering the waiver.” California’s emissions law is also the subject of a legal battle, with automakers suing to block enforcement of the law. They argue that it’s an indirect attempt to force them to improve gas mileage. [email protected] (916) 441-4602 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Regulating vehicle pollution is an important part of the state’s wider global warming efforts. Working with majority Democrats, Republican Schwarzenegger last year signed a landmark law to cut greenhouse gas emissions by 25 percent by 2020. During his re-election campaign last year, Schwarzenegger took pains to distance himself from the Bush administration, particularly on environmental issues. The Hummer-driving governor has become an unlikely environmental activist, headlining a recent climate change summit in Washington, D.C., and disparaging global warming skeptics as modern-day flat-earthers. His lawsuit threat involves a first-in-the-nation 2002 California law. It would restrict tailpipe emissions from millions of new sport-utility vehicles, minivans, cars and trucks sold in California, starting in 2009. A dozen states from Vermont to Oregon wish to adopt California’s standards. But the measures cannot take effect until California gets an exemption from the federal Clean Air Act. SACRAMENTO – Gov. Arnold Schwarzenegger on Wednesday threatened to sue the federal Environmental Protection Agency unless it moves quickly on California’s bid to limit greenhouse-gas emissions from vehicle tailpipes. California and a dozen other states have approved clean air regulations that are tougher than the federal government’s. But to actually enact them, they need a waiver from the EPA, which hasn’t been granted so far. Schwarzenegger delivered the warning in a phone call and a letter to EPA Administrator Stephen Johnson. The governor is required to give the federal government six months’ warning before filing a lawsuit. The federal government is moving “too slowly” on California’s wish to reduce greenhouse gas emissions, Schwarzenegger said Wednesday at a Milken Institute conference on climate change. “And, basically, our clock has started ticking for this next six months, and if we don’t see quick action from the federal government, we will sue the U.S. EPA.”