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Mutual funds’ voting on Climate Change out of step with mounting investment risk
  • The year 2010 tied with 2005 for the hottest year on record, globally.
  • In 2010 CO2 levels reached a record high.
  • Rising waters threatened coastlines and rendered properties in some parts of the world uninsurable.
  • In less than a year Australia recorded its driest ever month, June 2010, and its costliest-ever flooding, in January 2011.
  • Flooding in Pakistan in 2010, the worst in 80 years, affected 14 million people.
  • Russia’s heat wave, the country’s worst natural disaster ever, was linked to 56,000 deaths and wildfires threatened nuclear facilities.
  • In China the worst flooding in a decade combined with deforestation set off catastrophic mudslides and caused 12 million people to leave their homes.

These events match climate change predictions based on global warming: extreme weather events will increase in both number and intensity. For investors, this is very important news.

  • In 2010 (up to November) 108 climate-related lawsuits were filed in the U.S, continuing an exponential trend of year-on-year increase in climate-relate litigation activity.1
  • In January 2011, the World Economic Forum’s ‘Global Risks 2011’, Sixth Edition finds climate change to be the #1 Global Risk when ranked by a combination of likelihood and impact.2
  • In January 2011 Munich Re reported that “the high number of weather-related natural catastrophes and record temperatures both globally and in different regions of the world provide further indications of advancing climate change” and accounted for US$ 130 in losses.3
  • Also, the International Energy Agency recently noted that peak oil had come and gone in 2006.4

In a world threatened by climate change and constrained by conventional sources of energy derived from fossil fuels US mutual funds mostly voted down shareholder attempts to address climate change and fossil fuel dependence during the 2010 proxy season.

This year Ceres and Fund Votes continued their survey of the largest US mutual fund families’ voting patterns on climate resolutions. This marks the sixth annual survey, now spanning seven years. For 46 of the largest and most well-known US mutual fund brands, support for climate resolutions filed by shareholders actually dropped by 3.1 percent in 2010 compared with 2009.

The report identifies fund families that continue to outpace their peers in their support for climate resolutions, most notable amongst these are TIAA-CREF, Wells Fargo, Oppenheimer and Dimensional and three others. It also names those fund families, Vanguard, Fidelity, State Street and others, whose proxy voting on climate resolutions suggests an apathy towards, or neglect of, the investment risks posed by climate change.

For a closer look at the specific climate-related votes cast by the 46 large fund groups included in the survey, click on the corresponding fund group’s trend graph at Fund Votes website