Also Unveils Inaugural Annual Climate Report
State Street Global Advisors, the asset management business of
State Street Corporation (NYSE: STT), today published their 2020
Proxy Season Review, which details their voting and engagement
record this proxy season, and provides an overview of key focus
areas for the asset stewardship program. During the 2020 proxy
season, State Street Global Advisors’ asset stewardship team had
comprehensive engagements with 409 companies and voted on 113,595
proposals across 70 countries on behalf of clients. Key areas of
focus included: companies’ response and resilience in the face of
COVID-19, integration of State Street Global Advisors’ R-Factor™
ESG scoring system, and expanding the Fearless Girl campaign for
gender diversity. The Proxy Season Review was supplemented by an
inaugural Climate Report, to be published annually, which provides
further granularity on the stewardship team’s voting and engagement
activities related to climate. The asset stewardship team continues
engagement beyond proxy season on the areas of focus highlighted in
these reports.
“Stewardship is integral to our investment approach because we
see it as an essential aspect of fulfilling our fiduciary duty,”
said Rick Lacaille, Global Chief Investment Officer at State Street
Global Advisors. “Our stewardship program is designed to have an
impact, and we are pleased to share these reports showcasing the
continued impact of our program, under the leadership of Benjamin
Colton and Robert Walker.”
Guidance and Engagement on COVID-19
In light of the extraordinary circumstances induced by COVID-19,
in a March letter, State Street Global Advisors shared perspectives
on its 2020 asset stewardship agenda, offering assurance that as a
long-term shareholder, the firm stood ready to help companies
navigate these challenging times. The stewardship team has engaged
with 150 companies globally specifically on COVID-19 and its impact
on businesses and stakeholders. The pandemic has brought social
issues to the top of companies’ agendas, and in response, the
stewardship team’s engagement focus has shifted to more immediate
environmental, social and governance (ESG) issues, and particularly
the areas of: human capital; employee health and safety; and
diversity and inclusion.
“As long-term shareholders, we are committed to standing behind
our investee companies,” said Benjamin Colton, Global Co-Head of
Asset Stewardship for State Street Global Advisors. “We want to
help companies navigate short-term challenges, while striking a
balance to ensure these challenges are not being met at the expense
of longer-term priorities. These two reports detail our record on
working with companies on critical issues that can impact their
long-term sustainability.”
Engagement and Voting on R-Factor™ Scores
In January, ahead of the 2020 proxy season, State Street Global
Advisors sent a letter to boards detailing that it would begin
incorporating R-Factor™ into its engagement and voting priorities.
R-Factor, launched by State Street Global Advisors in 2019, is a
scoring system that measures the performance of a company’s
business operations and governance as it relates to financially
material and sector-specific ESG issues. R-Factor leverages widely
accepted, transparent materiality frameworks from the
Sustainability Accounting Standards Board (SASB) and offers
companies a roadmap on how to manage and disclose their ESG
practices, allowing them to take the action needed to enhance their
scores. It is built to address the current challenges with ESG data
by removing opaqueness around ESG materiality in the scoring
process. It takes the guesswork out of ESG reporting, and focuses
boards and management teams on the core ESG issues that matter for
business and investors.
During the 2020 proxy season, 14 companies who were laggards in
terms of their R-Factor scores held shareholder meetings. The
stewardship team requested engagement with all identified laggards.
The stewardship team subsequently voted against directors at nine
of the 14 meetings (64%) where companies’ responsiveness to our
engagement efforts could be improved. Of these nine companies, five
were in the United States and four were in the United Kingdom.
“We will continue to hold board directors accountable for their
ESG practices and related disclosure,” said Robert Walker, Global
Co-Head of Asset Stewardship for State Street Global Advisors. “We
will continue our engagement with companies to understand how they
will improve their disclosure, and will be prepared to use our
voting action as needed.”
Update and Expansion to Fearless Girl Campaign
Since the launch of the Fearless Girl campaign, on International
Women’s Day in 2017, 789 publicly-traded companies identified by
State Street Global Advisors who previously had no women on their
boards, have responded to the call by adding a female board
director. This represents an addition of over 100 companies since
the March 2020 announcement on the occasion of the third
anniversary of the Fearless Girl campaign, when the number was 681.
For the 2020 proxy season, State Street Global Advisors expanded
its gender diversity voting guidelines to Hong Kong and Singapore,
with the companies listed on the Straits Times and Hang Seng
indices being impacted. This voting guideline was introduced in the
US, UK and Australia in 2017, and extended to continental Europe,
Canada and Japan in 2018. In markets where State Street Global
Advisors applies a gender diversity voting guideline, the voting
policy was strengthened for 2020. The stewardship team now votes
against the entire nominating and governance committee, not just
the chair, if concerns exist about the lack of gender diversity for
four consecutive years and the companies are unable to engage in
productive dialogue.
“We are proud of the impact the Fearless Girl campaign has had
in improving the gender diversity conversation across the globe,”
added Walker. “There is so much more that needs to be done across
the many dimensions of diversity, and we are committed to this
mission. We recently wrote to board chairs outlining that State
Street Global Advisors will be asking companies in our investment
portfolio to articulate their risks, goals and strategy as related
to racial and ethnic diversity, and to make relevant disclosures
available to shareholders.”
Inaugural Climate Report Published
The stewardship team’s inaugural Climate Report details that
since 2014, the team has engaged with more than 600 companies
across multiple industries on climate-related issues. The number of
climate-related shareholder proposals submitted nearly doubled
during the 2020 proxy season. State Street Global Advisors
supported 34% of the 53 proposals in the first half of the year,
and supported 61% of shareholder proposals requesting companies to
report on the financial and physical risks of climate change on
their business as well as their plans to reduce greenhouse gas
(GHG) emissions.
“Climate change presents a systemic threat creating material
risks that companies must address and manage, and the topic will
continue to be a core theme of our program until we are confident
that companies are effectively addressing the issue,” added Colton.
“We believe incorporating climate change risk into companies’
strategic planning is critical to long-term value and we take a
case-by-case approach to voting on climate-related shareholder
proposals. This has resulted in the support of around 35% of such
proposals through the first half of the year compared to 14% during
the same timeframe in 2019. Engagement is also a key pillar of our
program, and a powerful tool for how we work with companies to
drive change.”
About State Street Global Advisors
For four decades, State Street Global Advisors has served the
world’s governments, institutions and financial advisors. With a
rigorous, risk-aware approach built on research, analysis and
market-tested experience, we build from a breadth of active and
index strategies to create cost-effective solutions. As stewards,
we help portfolio companies see that what is fair for people and
sustainable for the planet can deliver long-term performance. And,
as pioneers in index, ETF, and ESG investing, we are always
inventing new ways to invest. As a result, we have become the
world’s third-largest asset manager with US $3.05 trillion* under
our care.
*This figure is presented as of June 30, 2020 and includes
approximately $69.52 billion of assets with respect to SPDR
products for which State Street Global Advisors Funds Distributors,
LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Important Risk Information:
Investing involves risk including the risk of loss of
principal.
The whole or any part of this work may not be reproduced, copied
or transmitted or any of its contents disclosed to third parties
without State Street's express written consent.
State Street Global Advisors, One Iron Street, Boston, MA
02110
3265002.1.1.AM.RTL
EXP: 10/31/21
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Olivia Offner +1 617-662-0198 ooffner@statestreet.com
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