The activist fund manager 🏃🏋️‍♀️⛹

updated on 22 December 2022

This is a guest blog from a friend: Hyunjun Kim at Filament, a fellow startup that is working to make DIY investing easier for those who want to invest with their values.

Last October, a little-known hedge fund named Engine No. 1 made the headlines in the New York Times for a surprise victory over Exxon Mobil, a multinational fossil fuel giant. 

A New York Times Headline
A New York Times Headline

After a campaign that took over six months, Engine No. 1 got three sustainability-minded executives elected to Exxon’s Board of Directors. This propelled Engine No. 1 from obscurity to a (near) household name almost overnight. 

But as one of my friends always says: “You can’t win ‘em all.” Since the big win, Engine No. 1 has had multiple key executives leave the company and seems to have adopted an approach of accommodating large companies, including voting against a shareholder proposal at JP Morgan that would’ve reduced the bank’s funding of fossil fuel projects.

That got me thinking: which fund managers have a strong and consistent track record of engaging with the companies that they invest in on environmental, social, and governance (ESG) issues?

But before we dive in, let’s take a second to talk about what fund managers can even do to influence companies.


Shareholder activism 101.

When an individual or organization owns shares of a company, they have certain rights. The two that we’ll focus on are 1) proposing shareholder resolutions and 2) voting on key issues at the company’s annual meeting.

Fund managers can also engage companies in discussions about ESG behind the scenes, but we’ll talk less about this - mostly because there’s pretty limited data around who is doing what.

1) Shareholders who own more than $25,000 in shares* can propose a shareholder resolution: a recommendation to the company’s board of directors. These can be about, well, almost anything. For example, there was a proposal at Disney to build a statue of their founder, Walt Disney (the SEC did not approve it to come to a vote at their annual meeting).

But these days, the overwhelming majority are about issues related to ESG, with the most common ones being related to:

ESG Issue Example
Climate change (21%) Costco: Adopt net-zero greenhouse gas reduction targets
Corporate political influence (19%) Travelers Insurance: Disclose their lobbying efforts
Human rights (15%) Apple: Report on racial justice impacts / plan

These shareholder resolutions usually go to a vote during the shareholder’s annual meeting (we’ll talk more about that in a second) but some are withdrawn after negotiations with the company’s management. 

For example, a shareholder resolution proposed by a fund manager, Boston Trust Walden, was withdrawn from JP Morgan’s annual meeting after the bank agreed to publish a report on its lobbying efforts.


2) Anyone who owns a share of a company can vote on issues during the annual meeting.

These issues include the shareholder resolutions and other ~hot~ topics like executive compensation and elections for the board of directors.

However, not everyone has an equal voice, since one share equals one vote. 

The BlackRocks and Vanguards of the world own huge amounts of shares because they invest large sums of money through the mutual funds and exchange-traded funds (ETFs) that they manage (more to come on this).

Meanwhile, smaller fund managers (like Engine No. 1 or Green Century) may own many more shares compared to the average retail investor, but have nowhere near the amount of say as an organization like Vanguard. So to pass shareholder resolutions, these funds need to engage and get the support of organizations like Vanguard.

For example, in the Exxon Mobil example that we started with, Engine No. 1 was able to get the three board candidates approved (in large part) by getting Vanguard, BlackRock, and State Street on board, which collectively owned about 20% of Exxon.

How are fund managers doing?

That’s good news, right? After all, Larry Fink, the CEO of BlackRock (the biggest fund manager out there), has written multiple annual letters about the importance of sustainable investing, especially with respect to the climate. We’re saved!

Well… not exactly. 

Dr. Anna Lafarre at Tilburg Law School in the Netherlands looked at the voting records of institutional investors (like BlackRock) on issues related to ESG. Her paper concludes in a rather sobering way: 

“While BlackRock communicates climate change is the most pressing issue and promises to back more [corporate sustainability]-related shareholder proposals, we find no evidence for either claim.”

And BlackRock isn’t alone. In ShareAction’s ranking of the world’s biggest asset managers and their approaches towards responsible investing, Vanguard and Fidelity join BlackRock towards the bottom of the list. 

Just a heads up: this ratings system is a little wonky, but Ds and Es are the worst grades given.
Just a heads up: this ratings system is a little wonky, but Ds and Es are the worst grades given.

At this point, you’ve probably had enough of the doom and gloom and are wondering: who are the good fund managers?

Who are the best activist fund managers from an ESG perspective?

This is a hard question to answer, largely because we don’t have a complete picture on how each fund manager is engaging companies behind the scenes.

So we’ll start with two areas where we do have data:

  1. Who are the fund managers who are submitting the most shareholder proposals?
  2. Who are the fund managers who are most consistently voting for ESG shareholder proposals?

Oh. And we’ll focus on fund managers that have offerings in the US (since that’s where both Filament and EarthQuake operate), but we’d be missing a big piece of this if we didn’t mention that fund managers in Europe are much further ahead on shareholder activism.

1. Shareholder proposals: According to data from Proxy Preview, here are the fund managers who submitted the most proposals in 2022:

Shareholder proposals chart-i3ejb

Big props to these five fund managers: filing and getting support for shareholder resolutions takes a lot of time and hard work – in a future post, we’ll do a deep dive on these organizations and their offerings for retail investors.

You may have noticed that the big fund managers aren’t on this chart: BlackRock, Vanguard, State Street, and Fidelity. The four submitted as many shareholder resolutions as Rafael Nadal and Iga Swiatek: zero. 

Though in fairness to Rafa and Iga, they were probably busy, you know, winning the French Open.

So let’s move on to the voting records of the big fund managers!

2. Voting records: As we talked about earlier, voting matters. And here’s some really interesting data on how the big fund managers voted on resolutions related to climate change: 

Voting chart-b7529

Source: Ceres

Of the fund managers who reliably voted in favor of these resolutions, two offer mutual funds and ETFs for investors in the US: Amundi and HSBC. We’ll talk more about them next time.

And in case you didn’t look at every single detail, the four biggest fund managers are at the bottom, voting in favor of climate resolutions less than half of the time:

  • State Street: 43%
  • BlackRock: 41%
  • Vanguard: 37%
  • Fidelity: 30%

Not exactly confidence inspiring stuff.

One last thing. Why should this matter to you?

Man. You’re asking all the hard hitting questions today. The short of it is, when you invest in a mutual fund or ETF, you typically sign over your voting rights to the fund manager. That’s how the big players like BlackRock and Vanguard end up with such a big voice at the table.

In a future post, we’ll talk more about the fund managers who are doing good work – whether it’s by proposing resolutions or using their votes – and identify the funds that would make sense for retail investors looking to invest with these managers. 

Stay tuned!

But for now, thanks for reading! If you have any questions or comments, feel free to send me a message at

* Though it depends on how long you’ve held the shares. If you’ve owned the shares for more than three years, you only need $2,000 in the company’s stock. For two years, that goes up to $15,000. And for one year, $25,000.

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