Mutual Funds'  Strategic Voting on Environmental and Social Issues

Roni Michaely; Guillem Ordonez-Calafi; Silvina Rubio

doi:10.1093/rof/rfae017

Mutual Funds' Strategic Voting on Environmental and Social Issues

Roni Michaely^*, Guillem Ordonez-Calafi, Silvina Rubio

^*Corresponding author for this work

Research output: Contribution to journal › Article (Academic Journal) › peer-review

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Abstract

Environmental and social (ES) funds in non-ES families must balance incorporating the stakeholders' interests they advertise and maximizing shareholder value favored by their families. We find that these funds support ES proposals that are far from the majority threshold, while opposing them when their vote is more likely to be pivotal. This strategy results in a high average support for ES proposals, seemingly consistent with their fiduciary responsibilities, while opposing contested ES proposals. This greenwashing strategy is driven by ES funds in non-ES families who cater to institutional investors. Indeed, these funds experience lower inflows when providing low average support for ES proposals. This strategic voting is not exhibited in governance proposals, nor by ES funds in ES families or by non-ES funds in non-ES families, reinforcing the notion of strategic voting to accommodate family preferences while appearing to meet the fiduciaries responsibilities of the funds.

Original language	English
Pages (from-to)	1575-1610
Number of pages	36
Journal	Review of Finance
Volume	28
Issue number	5
Early online date	24 Jun 2024
DOIs	https://doi.org/10.1093/rof/rfae017
Publication status	Published - 1 Sept 2024

Bibliographical note

Publisher Copyright:
© 2024 The Author(s). Published by Oxford University Press on behalf of the European Finance Association. All rights reserved.

Research Groups and Themes

AF Corporate Finance

Keywords

responsible investment
strategic voting
mutual funds
fiduciary duty

Access to Document

10.1093/rof/rfae017

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Accepted author manuscript, 942 KBLicence: CC BY

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Cite this

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