Montgomery, AL – Alabama Attorney General Steve Marshall, alongside 23 other attorneys general, has taken steps to address potential concerns regarding the fiduciary responsibilities of the nation’s top asset managers. The group has sent a letter to 25 of these asset managers, questioning whether they are fulfilling their duties to clients by supporting environmental shareholder proposals. These proposals were flagged by the environmental group Ceres and recommended by Institutional Shareholder Services (ISS).
The attorneys general expressed concerns that these asset managers might be neglecting their fiduciary duties by possibly outsourcing their voting decisions to ISS or similar third-party organizations without conducting independent financial analyses of the proposals. The letter emphasizes that asset managers should prioritize financial returns over advancing non-financial goals.
Attorney General Marshall underscored the importance of asset managers remaining neutral and avoiding actions that could be seen as politically or socially motivated. “Asset managers must not allow the vast savings entrusted to them to be hijacked by activists to advance non-financial goals,” he stated.
Evidence cited in the letter suggests that the asset managers have been largely aligning their votes with ISS recommendations, particularly on environmental proposals, at a rate significantly higher than the overall market. This has raised concerns that these votes may not be in the best financial interests of shareholders, as some proposals were opposed by company management due to their potential negative impact on shareholders.
The letter also highlights potential conflicts of interest, particularly with ISS’s parent company, Deutsche Börse Group, which is involved in activist organizations promoting environmental goals. The attorneys general questioned whether these affiliations might influence ISS’s recommendations.
To address these concerns, the attorneys general have posed several questions to the asset managers, seeking detailed explanations of their voting processes, the financial analyses conducted, and their alignment with fiduciary duties. The asset managers have been given 30 days to respond to the inquiry.
This collective action by the attorneys general, led by the Montana Attorney General, includes representatives from states such as Arkansas, Florida, Georgia, and Texas, among others. The goal is to ensure that asset managers are acting in the best financial interests of their clients, rather than advancing external agendas.
