From the Financial Times’ nauseatingly named “Moral Money”:
The world’s biggest money managers have been talking an increasingly impressive game when it comes to their environmental and social impact. But when it comes to using their votes to drive action, there is a marked transatlantic divide.
Definitions of “increasingly impressive” may differ.
Money managers are, for the most, managing other people’s money. And unless those other people have specifically requested that their money be invested in a way that takes into account environmental and social impact even if it hurts return (spoiler: over time it almost certainly will), then the money managers’ job is solely to manage that money in a way that generates maximum risk-appropriate return. And that’s it. There is nothing remotely impressive about using other people’s money to pursue a social or political agenda to which they may not subscribe.
One small consolation is that American money managers appear to be less “impressive” than their European counterparts. According to the London-based nonprofit ShareAction (another denizen of “socially responsible” investing’s flourishing ecosystem), which has, reports the FT, “studied how 65 of the largest US and European asset managers handled shareholder votes on environmental and social issues,” European asset managers voted, on average, for nearly two-thirds of such proposals, while their U.S. equivalents “only” supported 39 percent:
“Power not used is power abused,” Catherine Howarth, ShareAction’s chief executive, told Moral Money. “The world is entitled to expect better of institutions that control this share of the votes.”
What Howarth means is that unless that power — which, to repeat myself, is derived from other people’s money — is wielded in a way of which her organization approves, it is “abused.” And as for what the “world is entitled to expect,” the answer is, apart from what has been laid down by law or regulation, absolutely nothing. The only question that matters is what the clients of those institutions are entitled to expect. It’s their money, and they are paying the fees. “The world,” not so much.
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