Long-Term Investors Now Hold Sway Over ESG
Investors are having more success on climate change, and increasingly are pushing companies on human rights, diversity and pay equity.
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Long-term investors—those who have perpetually flagged the kind of systemic and workforce issues that now face companies everywhere—are having an outsized influence during this global crisis.
Part of that is the surge in interest in ESG investing. UBS this week said it saw flows to ESG funds and pandemic bonds of more than $71 billion in the second quarter, bringing industry ESG assets under management to $1 trillion for the first time. Citing Morningstar data, the firm found that 56% of sustainable funds outperformed their peers in the second quarter. Sustainable investors will likely keep the wind at their backs as governments push green stimulus, the Swiss bank's analysts said.
Historically, long-term investors haven’t been the loudest voices at companies, but there are signs short-term shareholder activists at big companies are starting to get crowded out in such a volatile market. Shareholder activist campaigns at companies valued at more than $1 billion fell 25% in the first half of the year, according to Bloomberg Intelligence.
Long-term investors hold the most sway in annual meeting season, which is just wrapping up for the year. Even though much of the shareholder proposal process was set in motion before coronavirus lockdowns, the first ever virtual-only corporate annual meeting season showed long-term investors more willing than ever to speak up on ESG issues.
Investors had more success on climate change and increasingly pushed companies on human rights, diversity and pay equity. They more frequently opposed individual board member elections, were slightly more willing to oppose executive pay packages, and less tolerant of dual class shares.