By Ross Kerber
BOSTON, Dec 13 (Reuters) – State Street Corp’s asset-management arm on Tuesday joined a growing move by U.S. fund firms to devolve corporate proxy voting rights to investors, which could lessen the pressure the companies face from activists and politicians.
The Boston-based company’s asset management arm State Street Global Advisors will give certain institutional fund investors the power to chose how those funds are voted, similar to an ability already held by clients in separately managed accounts, State Street said in a statement.
Lochiel Crafter, head of the unit’s Global Institutional Group, said that “Giving even more investors the chance to choose how to vote shares held in funds they are invested in will remain a priority.” Under the latest change some 40% of the firm’s index equity assets could be voted by investors, State Street said.
Rival index managers BlackRock and Vanguard are also delegating voting responsibilities. The big three index fund managers run nearly $20 trillion between them and are among the largest shareholders of most top U.S. corporations plus many other globally.
Their low fees have brought in huge deposits of new investor cash. But the increased market power has brought criticism from all sides of the political spectrum targeting how the funds have cast votes at corporate annual meetings on sensitive topics like climate change or workers’ rights.
The Sierra Club for instance has
threatened
to withdraw money from BlackRock over its softer support for environmental resolutions earlier this year.
Meanwhile, last week, U.S. Republican Senators said the index fund firms use proxy voting to change managerial decision at portfolio companies, “relying on the implied threat that an asset manager will vote against particular directors or oppose management on controversial shareholder resolutions.”
In response State Street said it was open to talks but added “we believe our asset stewardship is an important component of our overall investment program and serves the best interests of our clients.” (Reporting by Ross Kerber; Editing by David Gregorio)
