State Street report outlines approach to climate change

State Street Global Advisors (SSGA) has published its latest Task Force on Climate-related Financial Disclosures (TCFD) report exploring how it approaches climate-change risk analysis and management.

In a June 27 announcement, State Street explained that as a fiduciary, its focus is on “progressing best practices and engaging with companies on their disclosure, plans, and progress regarding climate-related risks and opportunities,” as well as on developing related investment solutions in response to client demand.

The 33-page report provides an update on progress across the four pillars of governance, strategy, risk management, metrics and targets.

The report highlighted that State Street has established a governance structure that actively considers climate and other environmental factors. On strategy, it stressed that climate change is rooted in its fiduciary duty to invest assets in clients’ best interests and to seek value over the long term.

On risk management, the asset manager stated its belief that climate change may be a financial risk to its clients’ portfolios and to its business.

In 2022, State Street voted on 155 climate-related shareholder proposals at its portfolio companies and supported 44% of such proposals, a slight decrease compared to 2021. “Overall, we were generally not supportive of shareholder proposals that we felt were overly prescriptive, such as those calling for a transition to renewable energy within a defined timeframe or phasing out a project, business, or product,” the report explained.

The asset manager indicated it will continue to support proposals that it believes will support long-term shareholder value.

“We continue to believe that climate change can present both risks and opportunities for the companies in which we invest on behalf of our clients and therefore should be well understood and managed by those companies,” said State Street CEO Yie-Hsin Hung while also affirming that climate change will remain one of the asset manager’s top stewardship priorities for “the foreseeable future.”