Members of the TSET Board of Investors, which oversees Oklahoma’s $2 billion tobacco settlement trust, have taken significant steps to reshape their asset managers’ voting practices. In a decisive 4-0 vote, the board has instructed its investment consultant, Innovest, to request that five asset managers align their voting policies on shareholder resolutions with what they characterize as “Oklahoma values.”
This move signals a shift away from reliance on traditional proxy advisory firms. The TSET Board has expressed dissatisfaction with the asset managers’ current practices, which predominantly involve either utilizing their own research or following the recommendations of leading proxy advisory firms, ISS and Glass Lewis. Instead, the board has directed that these managers use voting guidance from Vident Asset Management, a Georgia-based financial firm that promotes a distinct set of voting principles.
The decision reflects a broader trend among institutional investors seeking to assert greater control over how their assets are managed, particularly in relation to environmental, social, and governance (ESG) issues. The TSET Board has indicated that it aims to ensure that its investment strategies resonate with the values of Oklahoma’s stakeholders, which it believes have not been adequately represented in recent voting decisions made by external managers.
As the board moves forward with this directive, it is poised to impact the way asset management firms engage with shareholder resolutions. By prioritizing advice from Vident, the TSET Board is not only reinforcing its commitment to local values but also positioning itself as a significant player in the ongoing debate over ESG criteria in investment decision-making.
The implications of this shift may extend beyond Oklahoma, as other investment boards observe the TSET Board’s actions. The recent developments could prompt asset managers nationwide to reconsider their voting policies and the criteria they use when determining their engagement with shareholder resolutions.
The TSET Board’s decision is emblematic of a growing sentiment among certain institutional investors who are increasingly challenging established norms in investment management. As the landscape continues to evolve, the board’s actions may serve as a catalyst for similar initiatives across other states and investment entities.