Many of the largest asset managers in the United States have sharply reduced their support for environmental, social, and governance (ESG) investing during the most recent proxy season, a new report says.
The Committee to Unleash Prosperity released its 2025 scorecard. It found that companies such as BlackRock, State Street, JPMorgan, and others are voting against ESG and diversity-related shareholder resolutions far more often than they did three years ago.
The report graded 40 major fund families based on how they voted on 50 shareholder proposals the group described as “extreme ESG-oriented resolutions.”
These proposals included racial and gender quota requirements, net-zero emissions mandates, environmental audits, and political spending reviews. The group says these measures conflict with a manager’s main duty to maximize returns for investors.
For example, an investigation by The Center Square found that the California Public Employees’ Retirement System for state employees lost 71% of its $468 million investment in a clean energy and technology private equity fund. In response to The Center Square reporting a state lawmaker asked the federal government to investigate.
In The Committee to Unleash Prosperity’s report, BlackRock saw one of the largest changes. It received a C grade in 2023 and a B in 2024. However, this year it received an A.
The report notes that BlackRock removed language from its proxy voting guidelines that previously recommended boards aim for at least 30% “diverse” directors. State Street also moved upward and now holds a B after receiving a D in 2023. JPMorgan, T. Rowe Price, and Goldman Sachs also received A grades.
Other companies did not improve. Franklin Templeton, Guggenheim, and Morgan Stanley received D grades. Allspring, DWS, and Victory Funds received failing grades.
The group says the trend is driven by increased scrutiny from lawmakers, state officials, and investors. It also points to declining investor interest in ESG funds. Morningstar reported that U.S. ESG funds saw $19.6 billion in withdrawals in 2024, after $13 billion in withdrawals in 2023.
The movement comes amid growing federal and state attention on the proxy adviser industry. Proxy advisers play a big role because they issue recommendations on how fund managers should vote on shareholder proposals.
Glass Lewis and Institutional Shareholder Services dominate the market. Both firms have been pressed by state attorneys general over their support for emissions goals, diversity targets, and other policies. The Federal Trade Commission opened an antitrust investigation into the two companies last week.
Additionally, in Texas, Sen. Bryan Hughes, R-Quitman, introduced legislation this year to prevent proxy advisers from recommending votes based on ESG or diversity considerations.
Financial leaders have also raised concerns.
JPMorgan CEO Jamie Dimon has criticized proxy advisers several times and said last year that they have “undue influence.” He also said some recommendations conflict with the duty to prioritize shareholder value.
The Wall Street Journal Editorial Board praised the broader shift away from ESG priorities in a recent editorial. It wrote that “smart CEOs keep their eyes on the North Star of maximizing returns to shareholders, which is the best way to help customers, employees and the larger society.”
The Committee to Unleash Prosperity says its goal is to show investors how their fund managers are casting votes. The group says many investors remain unaware that their shares are being voted on for political reasons rather than financial performance.
