ESG: State Street Will Turn Screws on ESG Laggards

With $3.1 Trillion in AUM, the firm will target company boardrooms

State Street Global Advisors will vote against companies that lag behind on ESG standards. The company stands as one of the largest shareholders in public companies due to its stance as a global index fund provider. The firm will lean on its “responsibility factor” a system that measures the performance of companies on ESG metrics.

State Street Global Advisors on ESG Factors

SSGA will “take appropriate voting action” against board members at big US, UK, Australian, Japanese, German and French companies that are laggards based on this measure and “cannot articulate how they plan to improve their score,” according to a letter seen by the Financial Times.

Their voting campaign will start during the 2020 proxy season. However, it will start voting against board members in 2022 who have underperformed against their peers.
“Ultimately, we have a fiduciary responsibility to our clients to maximize the probability of attractive long-term returns — and will never hesitate to use our voice and vote to deliver better performance for them,” said the letter. “This is why we are so focused on financially material ESG issues.”

State Street Global Advisors will increase their focus on issues like sustainability, diversity, and climate change. SSGA has found success in pushing diversity commitments at public firms. Since 2017, it has succeeded in getting firms to add or agree to add women to their board of directors at 583 companies.

Related: ESG: A Firm’s ESG Investments Could Launch a Virtuous Circle – ISS Report

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