SEC supports shareholders right to hold investment companies accountable on climate change
Poor voting records on climate proposals highlighted
November 25, 2015 – Boston, MA
Investor efforts to push companies to act on climate change have been strengthened by yesterday’s Securities and Exchange Commission (SEC) ruling that Franklin Resources, which manages the Franklin Templeton family of mutual funds,will be required to include a shareholder resolution on its 2016 ballot focusing on its poor voting record on climate change proposals. The resolution was filed by Zevin Asset Management, an independent, socially responsible investment management firm, to highlight the contradiction between Franklin’s voting practices and its policy positions regarding climate change. A similar proposal has also been filed by Zevin at T Rowe Price. The SEC’s ruling is especially timely given the upcoming United Nations climate conference (COP21) in Paris and paves the way for shareholders to push other investment companies, including big banks, on their proxy voting records.
Research conducted by Fundvotes, on behalf of Ceres, shows that Franklin Templeton mutual funds’ voting record on climate change issues is near the bottom of the pack among mutual funds. However, in its 2014 response to the Carbon Disclosure Project (CDP), the company states that “Franklin Templeton’s fundamental bottom-up approach to investing, which takes climate change-related factors into consideration, gives the company a competitive advantage by managing risk and opportunities within portfolios and attracting investors…”Franklin’s voting record is all the more striking given that Franklin Templeton Investments has been a signatory to the United Nations Principles for Responsible Investment since 2013. This commitment creates a “green” branding for the Company and signifies a willingness to be publicly accountable for its activities on environmental, social, and governance (ESG) matters.
Given that proxy voting is one of the principal ways in which investors can engage in active management of portfolio risks and opportunities related to climate change, it appears that Franklin mutual funds’ proxy voting record isinconsistent with a proactive approach to climate change. This is in stark contrast to funds managed by investment firms such as Deutsche Asset Management, Oppenheimer, and AllianceBernstein who support the majority of climate change resolutions.
“Franklin’sinconsistency on climate poses a reputational risk to the company, especially given the contrast with many of its competitors”, said Sonia Kowal, President of Zevin Asset Management. “Given the severe threats of climate change to human societies and economies, Franklin’s clients may start to wonder if their investments are in good hands. We hope that other investment companieswill now become more thorough and transparent in making decisions on climate related issues”.
The full text of the SEC decision and correspondence from the company and the proponent can be found here: proposal was co-filed by First Affirmative Financial Network, LLC and Friends Fiduciary Corporation.
For more information: Sonia Kowal, President, Zevin Asset Management, LLC
617-742-6666
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Zevin Asset Management, LLC ( Zevin’s first objective is to minimize losses rather than seeking to maximize gains. The firm’s proprietary scenario forecasting approach has been refined over 40 years and has resulted in strong investment results by avoiding exposure to excessive risk. Zevin’s focus on environmental, social, and governance factors has also helped improve the risk/return profile of client portfolios. Zevin is a 100% employee-owned and majority women-owned firm.
Disclosures: Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, likeall predictors of future events, cannot be guaranteed to be accurate and may resultin economic loss to the investor.While Zevin Asset Management, LLC believes the outside data sources cited to be credible, it has notindependently verified the correctness of any of their inputs or calculations and,therefore, does not warranty the accuracy of any third-party sources orinformation.General topical discussions should not be construed as Zevin Asset Management's endorsement or recommendation of any third-party investment vehicles, vendors or investment managers.