The annual shareholder proxy voting season has become more loaded and closely watched for tangible progress being made on sustainability. Amazon and Exxon are among those in this year's firing line.

A growing practice among asset managers with a strong sustainability mandate is to declare their voting intentions on key ESG resolutions ahead of annual AGMs, making public where investees are not meeting their obligations. AGMs have become fraught with expectations and missed targets for listed companies on everything from labour rights to board diversity.

Among thousands of resolutions submitted annually, ExxonMobil shareholders issued a significant rebuke on Wednesday, winning a vote to change several directors on the US energy giant's board. The resolution to shake up the top table, headed over several months by activist hedge fund Engine No 1, was in response to executives not moving fast enough to divest from core extraction businesses. As it happens, BlackRock's Larry Fink backed three of Engine’s four nominees.

It is being heralded as a landmark moment by some campaigners. Whether that is the case, it does show a surge in shareholder activism power as it becomes harder to separate sustainability and climate risk from capital allocation.

Amazon was another big target this year with 11 resolutions. German asset manager DWS called out the retailer this week for its labour practices, including the absence of collective bargaining and labour unions. Though it should be noted that Amazon workers in Alabama earlier this year voted against unionising.

The retail giant counts mutual funds Vanguard, Fidelity, and State Street, among its top three investors, holding trillions of dollars in assets between them.

In one sense, giants of finance are coming up against consumer giants that dominate the main indexes, and these in turn are monopolised by a handful of asset houses. Such concentrated clout is a good thing depending on how confident you are that firms such as BlackRock or Fidelity are going use their influence to pass more of these more radical resolutions which growing numbers of investors want incorporating now rather than later.

ShareAction found that 17 additional climate-related resolutions would have passed in 2020 if one or more of the Big Three (Blackrock, Vanguard, and State Street) had changed their vote, according to its "Voting Matters" report of outcomes last year. It said that in all of these cases, BlackRock and Vanguard voted against the resolutions. Meanwhile, State Street voted for 6 of the 17 resolutions.

Voting records at AGMs are a better judge of where asset managers are taking action and a relief from the rhetoric that has filled ESG marketing reports over the last couple of years.

European asset managers continue to outperform US asset managers overall on their climate voting record, according to ShareAction data, with the top 17 best performers all based in Europe. (See the chart below for how European asset managers stack up in terms of proxy voting on climate, based on the percentage of positive votes.)

The best-performing US asset manager is Northern Trust Asset Management, 18th on the global list, with a number of US managers rapidly catching up with their European counterparts on voting activity. JPMorgan Investment Management and Wellington Management were among those which had "much improved" last year. The chart below shows how US asset managers compare in terms of proxy voting on climate, again based on the percentage of positive votes.

Amazon
As for Amazon's treatment of workers, DWS suggested that it had deteriorated during the pandemic, culminating in “alleged unfair termination of employees for protests, alleged poor working conditions, and inadequate safety measures," the asset manager said in a letter it sent to Amazon CEO Jeff Bezos, published this week.

The claims put to Amazon arguably come at a time when its logistics prowess and doorstep deliveries have never been more appreciated by consumers, suggesting a level of soul searching needed about what ESG means to people in their everyday lives.

DWS is asking Amazon to take a number of steps to solve its ESG controversies and avoid them “becoming more structural and recurring." These include publishing a transparent investment plan for employee and labour management, allowing unions and collective bargaining, and moving towards a transparent supply chain. Also required is implementing and enforcing ESG at board level, with a clear roadmap that set targets and milestones for employee wellbeing, occupational health and safety, emissions' reduction targets, while explicitly linking executive pay to these sustainability targets.

That last request of explicitly linking actions to executive pay, has become another potent weapon for holding companies to be more accountable on improving culture and practices.

Amazon's responses to all of this year's shareholder proposals are listed here.