NETHERLANDS - The voting behaviour on environmental and social issues of large institutional investors is often different from their actual opinion, the Dutch Association of Investors for Sustainable Development, or VBDO, says.
The institutions monitored were civil service scheme ABP, health care scheme PGGM, railways scheme SPF, ABN Amro, ING, Aegon and Robeco.
“When they vote against proposals, while they are actually in favour, they fail to explain their decision,” the body added. It monitored the voting behaviour of seven Dutch investors on proposals tabled during shareholders’ meetings of US companies last year.
VBDO concludes that, according to the current practice, the companies disagree with 88% of the proposals on corporate social responsibility. “In some cases voting has even been against international accepted standards, such as the ILO Labour Standards.”
None of the investors supported reporting drilling damage in protected regions by Exxon Mobil Corporation, VBDO added. “By voting against a proposal they actually agree with, companies offer the management a future argument not to adhere to the content of a proposal,” it warned.
“It has been regularly communicated to us that institutional investors usually vote against, although they are actually in support of a proposal,” VBDO said. It concludes that management advice is the leading issue for the investors.
According to VBDO, all of the seven institutional investors follow corporate governance principles as the basis of their voting behaviour. “But there are hardly any specific voting guidelines on corporate social responsibility related issues in proxy voting policies.”
“Our first priority is a high return on our investments,” commented ABP spokesman Thijs Steger. “In the US, the initiatives of environmental groups get onto the agenda relatively easily, but the pressure groups often ignore the financial consequences of their proposals.”
“The philosophy behind many proposals is right. However, their wording is sometimes so radical, that a company can’t cope with it,” said a spokeswoman at PGGM.