Newsroom

Overview

In a prior installment covering shareholder voting and proxies, we commented on the Bud Light dilemma, whereby the introduction and subsequent pulling of advertisements featuring Dylan Mulvaney alienated both sides of the cultural spectrum. Other companies, such as Disney, similarly found themselves in hot water over some of the characters used in a production. Closer to home, a major asset manager unwittingly is finding itself in a “no-win” situation. Our view is that there is an easy fix to the problem.

Background

The headlines are sobering and probably nightmarish for the affected firms (note names are deleted intentionally):

“[Blank] and [blank] Lose $34 Billion in Mandates from Dutch Pension Fund’s Shift to Sustainability & Active-Focused Investment Policy” - Reuters September 4, 2025

The issue is very simple: the underlying investor, the Dutch Pension Fund PFZW, did not believe that the asset manager was sufficiently diligent in pursuing sustainability objectives:

“We deliberately seek asset managers who are not only financially strong but who also share our sustainability ambitions”

What makes matters more complicated is that many other jurisdictions are insisting that managers ignore sustainability targets, and one jurisdiction—Texas—is suing several large asset managers:

“[Blank] other fund managers lose bid to dismiss Texas climate collusion lawsuit”

The asset managers are reportedly accused of encouraging coal companies to restrict production in an effort to meet sustainability goals, which supposedly reduced revenue for the coal companies and increased costs for users of coal (raising related antitrust concerns). Hence, the asset manager is facing a dilemma in which it cannot please either camp, and simply taking a neutral position will not do. In our words, they are in the “killing fields,” being shot at by both camps.

A Rethink

In our view, solving this problem requires a rethinking of the services provided. The smoothest institutional salesperson is unlikely to bridge the gap, and what is needed is a re-examination of client needs and how best to serve those needs. If the sustainability client values sustainability, then perhaps they should be provided with that information, but it cannot be placed in the same bucket for other clients, including those in opposite camps.

To be successful, it is probably best to inoculate the asset manager from some of the issues, such as proxy voting, which is often polarizing. Rather than attempt to explain to clients how votes were cast, perhaps a better approach is to sidestep the issue entirely and enable the client to choose the voting methodology themself and outsource to third-party firms. Such an approach takes the concerns off the table and enables managers to do what they do best: asset selection and client management. This is the approach that the Big Three asset managers and others have taken with the launch of these managers’ proxy voting choice programs. A further expansion of the program will likely increasingly shield these asset managers from criticism.

Conclusion

One’s current clients are one’s best clients; losing such clients is always painful. The world is constantly changing, and perhaps the old approaches are worth updating to better fit evolving market needs.