Impact Blog

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Shirley Peoples, ESG Research Analyst, Calvert Research and Management

      Washington - Not all responsible investment funds are created equal is the underlying theme of a recent Barron's article, "Fund Sustainability Ratings Tell Half the Story." While some mutual funds with sustainable investment mandates actively try to influence corporate behavior, others don't.

      To determine which camp your fund belongs in, investors may wish to examine a mutual fund's proxy-voting record on issues like climate change and gender and racial diversity on corporate boards, among many other ESG issues.

      The Barron's article looks at the 2017 proxy-voting record of funds that scored well in Morningstar's sustainability ratings. It found that even funds with explicit environmental, social and governance (ESG) mandates largely voted in line with management against proposals for increased climate-risk disclosure, increased board diversity, and proposals for reports on gender pay gaps.

      Calvert has long agreed with the sentiments expressed in the Barron's article. Indeed, Calvert has a long track record of actively seeking to influence corporate behavior through proxy voting, filing shareholder resolutions, and other forms of direct advocacy. We advocate for our shareholders' values on critical environmental, governance and human rights issues. Sometimes this results in management agreeing to take specific steps to address the ESG concerns we have raised, allowing us to withdraw shareholder proposals before going to a vote.

      In the most recent proxy season, covering from July 1, 2016 to June 30, 2017, Calvert voted on issues ranging from climate change and energy to board diversity and sustainability reporting. In ESG-directed proxy proposals, Calvert voted contrary to management 91.8% of the time.


      Environmental Issues Front and Center

      Increasingly, investors are examining how large mutual fund managers vote their proxies. An analysis of 42 leading mutual funds revealed that nine firms failed to support any shareholder proposals on climate change in 2015, according to the U.S. SIF report on U.S. Sustainable, Responsible and Impact Investing Trends 2016.2

      In the most recent proxy season, Calvert voted against management on environmental issues nearly 98% of the time, while our asset manager peer group opposed management 36% of the time, as reflected in the charts above. A vote against management is significant since corporations typically seek to maintain the operational status-quo. Environmental issues have led Calvert's advocacy agenda for over a decade, focused on areas such as greenhouse gas emissions, water conservation and the development of renewable energy sources, among others.

      We vote according to Calvert's proxy voting guidelines, which are aligned with the Calvert Principles for Responsible Investment. These guidelines integrate corporate governance and social responsibility into a "sustainable governance" model.

      Bottom Line: We believe proxy voting is a powerful shareholder responsibility and tool, and can be an effective way to help move the needle on critical ESG issues.