'Spicy shift’: Canadian asset managers withhold director votes over climate inaction
Why It Matters
Canada is not on target to reduce its carbon emissions to an agreed-upon level by 2030, and shareholder pressure is an underused strategy to enact change.
A new report shows that more than one-third of asset managers withheld their votes for companies’ directors due to their failure to address climate change in 2024.
The asset managers from Canada and the U.S. who are members of Climate Action 100+ and Climate Engagement Canada withheld their votes for board members during Annual General Meetings across the continent.
“That is both good and surprising news,” said Kyra Bell-Pasht, Director of Research and Policy at Investors for Paris Compliance (I4PC) and co-author of the annual report “2024: Canadian Voting Climate Report”. “We did not expect asset managers to take that stand.
“In the spectrum of shareholder engagement, withholding a vote for a director is spicy,” she added.
For the last three years, I4PC has monitored if and how Canadian asset managers who belong to CA 100+ and CEC push corporate action toward a net-zero economy. Do they engage beyond rhetorical statements?
One way to measure this is what’s known as shareholder activism. It includes private actions, such as a discussion between an asset manager and a CEO about the company’s climate strategy, and public actions, like presenting a shareholder proposition at the annual meeting or withholding a vote for a director due to climate inaction.
“Usually, a directors’ vote is a formality, said Bell-Pasht. “They get re-elected by shareholders with a 99 per cent approval rate.
“Our report findings about how asset managers’ behaved in 2024 might signal an evolution toward more mature climate engagement in Canada.”
Having an asset manager withhold their vote tarnishes a director’s reputation, said Bell-Pasht. It also sends a clear message: leaders are ultimately accountable for their company’s climate targets.
The largest cohort of asset managers withholding directors’ votes is the BC Public Sector Pension Fund and a group of six clients of GRI, a Quebec-based proxy service provider (Gestion FÉRIQUE, Genus Capital, Vancity Investment Management, United Church of Canada, Bâtirente, and Triasima).
“Most asset managers tell their clients there is no need to divest from fossil industries, saying they will push for positive action through shareholders activism,” said Bell-Pasht
“Our reports show who does well and who does not. Then, it is up to asset owners, like philanthropic foundations, to ask their asset manager how they engage with the companies about climate change.”
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