Franklin Resources loses bid to skip vote on climate change

Reuters News
Posted: Nov 25, 2015 7:04 PM

By Ross Kerber

BOSTON (Reuters) - In a setback for Franklin Resources Inc that could have implications for other asset managers, a U.S. regulator declined to let the California company skip a shareholder vote over its record on climate change, according to materials provided by activists on Wednesday.

The decision by a U.S. Securities and Exchange Commission official should help investors pressure other big fund firms to pay more attention to climate matters, said Sonia Kowal, president of Zevin Asset Management of Boston, the lead backer of the measure at Franklin Resources.

"It could be very significant in terms of follow-up effects at other companies, who have been happy not to think about these issues," Kowal said in an interview.

A spokesman for Franklin Resources did not immediately comment. Spokespeople for the SEC did not immediately return messages.

As the largest investors in most big U.S. companies, Franklin and other large mutual fund sponsors wield much influence on matters that are put to shareholder votes.

In recent years, environmentalists have used these corporate elections to pressure companies to report on greenhouse gas emissions or the financial risks they could face from hotter global temperatures.

Franklin and some other big mutual funds have rarely backed these measures, according to voting data analyzed by the activists,[] a record that could face scrutiny ahead of U.N. talks on global warming in Paris.

In the past Zevin, which manages about $600 million, and other Franklin Resources shareholders had sought a broad review of its voting, but regulators let the company skip such a vote on grounds the request covered "ordinary business."

This year, Zevin narrowed the request to propose that Franklin report any incongruities between its proxy voting and its own policies, such as that climate change is part of its investment risk assessment process.

In a Nov. 24 letter provided by Zevin, an SEC attorney rejected various arguments by Franklin including that the proposal covered ordinary business operations and called climate change a "significant policy issue."

Among publicly traded fund firms, Kowal said activists have made a similar proposal to T. Rowe Price Group, and hope the decision in the Franklin matter will help get the measure before the Baltimore company's own shareholders at its annual meeting next year.

T. Rowe spokespeople did not immediately comment.

(Reporting by Ross Kerber; Editing by Cynthia Osterman)