Last year Walden Asset Management filed a resolution at State Street Global Advisors (SSgA) seeking a proxy review. While SSgA successfully obtained a “no-action” letter from the SEC, their voting practices were still the subject of a debate at the annual meeting. This year United for a Fair Economy picked up the torch and filed a similar appeal. This time, SSgA responded positively and UFE has withdrawn its resolution.
Previously, SSgA voted automatically Against ALL shareholder resolutions on environmental and social issues, whether the issue affected shareholder value or not. Over the years this record had become increasingly controversial and was challenged by a number of SSgA clients including pension funds in Europe as well as investors and environmental groups here in the USA. An internal review found SSgA found its voting in stark contrast to State Street’s own forward looking record on the environment and other CSR issues.
State Street’s review included a comparison to other mainstream investment firms which are competitors. It found that the SSgA proxy voting was an “outlier” in comparison to these firms records. According to Timothy Smith of Walden Assets, SSgA will now abstain if the resolution’s economic impact case is not clear, but will vote FOR resolutions where a strong case regarding how this affects shareholder value is made. This is very similar to Risk Metrics position. SSgA notes it is understaffed to do robust proxy voting so may add staff and of course will look seriously at recommendations of proxy advisory firms they use.
Our congratulations to Walden’s Timothy Smith and to Mike Lapham of Responsible Wealth. This is a significant shift in proxy voting by a major firm. It is great to see SSgA now more fully addressing its proxy voting responsibilities.