This week in ESG
Regulation push-back, shifting climate commitments, and a milestone for gender diversity on UK boards.
Key highlights
⌛ SDR delay for MPS providers – the FCA has delayed its policy statement on extending SDR labelling rules to MPS providers, originally expected this quarter. No clear explanation or new release date has been provided. Read our article on what this delay means for financial firms to find out more.
🛑 Climate change reporting uncertainty – US scientists set to start work on the next Intergovernmental Panel on Climate Change (IPCC) report – a globally trusted source on climate change – have been hit with a stop work order by Trump, bringing its future into question.
🌍 HSBC pushes back climate goals – HSBC postponed its net zero target for its operations and supply chains by 20 years, shifting from 2030 to 2050, blaming a lack of progress in global decarbonisation.
📉 ESG shareholder resolutions lose support – a new ShareAction report reveals only 1.4% of ESG-related shareholder resolutions received majority backing in 2024, marking a record low.
♀️ Record gender diversity on FTSE 100 boards – women now hold 45% of board representation, reaching a record high this year. Additionally, women now make up over 50% of Non-Executive Directors in the FTSE 100.
Chart spotlight - declining ESG voting support from large asset management groups
Source: ShareAction, 2024
The chart above shows the support given to environmental, social and (certain) governance issues in 2024, as voted on by four of the largest asset management houses. It tracks the percentage of ‘For’ votes cast in favour of ESG resolutions proposed by shareholders at company AGMs.
Why this matters?
Although support for ESG resolutions has never been high on an absolute basis, the decline since 2021 is worrying – especially given the significant influence these asset managers have on company voting due to their size and extensive stock ownership across global markets. The decline in support from these US-based managers reflects the broader anti-ESG sentiment in America, undoubtedly heightened by Trump and his attacks on Diversity, Equity, and Inclusion (DEI) initiatives as well as climate efforts.
However, this trend isn’t universal. Many asset managers, particularly in Europe, remain committed to ESG. They demonstrate this with their voting in support of positive shareholder resolutions, voting against management, and continuing to engage with the underlying companies they invest in.
This highlights the need to be prudent when selecting fund management companies to work with – and the importance of making sure they share your values and long-term goals, especially when it comes to ESG principles.
Keep an eye out for our 2025 gender and race diversity report coming out next week...
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity.
Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
