Abstentions up on CSR resolutions

Oct 14, 2008

Voting pattern is ‘puzzling’, according to expert

Analysis of mutual fund voting over the last five years shows a marked increase in the number of abstentions on CSR resolutions, according to research by FundVotes.com, an independent project founded by Jackie Cook, a former senior research associate at The Corporate Library.

Abstentions by fund groups on CSR resolutions are up from 10 percent in 2004 to 16 percent in 2008. This corresponds with a fall in opposition to CSR resolutions from 85 percent to 72 percent over the five-year period. General shareholder votes on social and environmental resolutions follow a similar pattern, with abstentions up 5 percent to 14.6 percent and opposition down 7 percent to 72.7 percent, reports the study.

Cook feels the increase in abstentions is ‘puzzling’, and has found no compelling explanation for the trend from fellow experts, but thinks mutual funds may be operating a wait-and-see policy. ‘Mainstream funds might be waiting to see how the debate on CSR issues, like climate change, pans out,’ she comments. ‘Or they might be waiting to see how the SEC deals with these types of resolutions after the election in November.’

Cook’s research uses 10.5 mn US mutual fund proxy voting records analyzed over five years. Average support for management resolutions is stable over the period of research at 90 percent, while average support for shareholder resolutions stands at 36.6 percent in 2008, up from 31.3 percent in 2004.

By Tim Human