The five largest asset managers in the world are falling short of expected Environmental, Social and Governance (ESG) commitments, according to a new report by the Global Unions’ Committee on Workers’ Capital (CWC). These five asset managers – BlackRock, Vanguard, Fidelity Investments, State Street Global Advisors, and J.P. Morgan Asset Management – are all U.S. based.
Four of these five asset managers are among the top 40 money managers in Canada, according to the bi-annual report by the Canadian Institutional Investment Network. BlackRock is the second largest money manager in Canada, holding roughly $147.4 billion in Canadian Pension Assets in 2023. Fidelity is the sixth largest money manager in Canada and held about $37.3 billion in pension assets.
In 2022, the CWC established baseline expectations it has for asset managers on fundamental labour rights. Asset managers are expected to engage with the corporations in which they have invested to ensure the elimination of forced or compulsory labour, the abolition of child labour, a safe and healthy working environment, the elimination of discrimination in respect of employment and occupation, and freedom of association, and the effective recognition of the right to collective bargaining.
The world’s top five asset managers showed less than 22 per cent alignment with the CWC view for 2024 shareholder resolutions promoting freedom of association and collective bargaining. In contrast, top asset managers based outside of the U.S. showed a 71 per cent alignment with the CWC views.
Given these numbers, the CWC is calling on workers to contact their client relationship manager and to the head of ESGstewardship at their asset managers, and ask that they review the report and respond to the key findings.
ESG policies within a company can be greatly influenced by large asset managers, according to the CWC, because these managers are often the largest shareholders within a company. As such, asset managers have the capacity to vote for better labour practices or more concern for the environment.
However, some asset companies do not make their level of commitment to ESG issues publicly available. While BlackRock, Canada’s second largest money manager, discloses the names of all the companies they engage with on an annual or quarterly basis, Fidelity Investments does not.
Capitalists against ESG commitments often employ the argument that companies belong to the shareholders, not the community. A report by the American Institute for Economic Research criticized ESG advocates because they bring too many “conflicting” goals under one umbrella. They say ESG criteria are often vague and difficult to measure. This has been particularly true with attempts to create financially “superior” ESG index funds.
The CWC argues that since pension assets are largely made up of payments from workers’ the management of these assets should reflect workers’ interests. As well, freedom of association and freedom to form trade unions are rights everyone is entitled to under the UN’s International Bill of Human Rights.
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