BlackRock’s support for ESG measures falls to new low

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BlackRock’s support for shareholder proposals on environmental and social issues has fallen to a fraction of its 2021 peak, it disclosed on Wednesday, even as its support for governance-related questions rose.

In the 12 months to the end of June, BlackRock supported just 20 of the 493 environmental and social proposals put forward by shareholders at annual meetings, or about 4 per cent of the total, according to its annual investment stewardship report.

That compares with a high of 47 per cent in 2021. By last year the figure had fallen to 7 per cent.

The decline in support comes as companies’ efforts to address climate change and inequality — issues that were once bundled together with governance under the ESG umbrella — have become politically fraught.

Conservatives have accused BlackRock and other large asset managers of using their large holdings to pursue “woke capitalism”, while the left has complained that investors have failed to push hard enough for decarbonisation.

But governance-related activities seeking to protect shareholder rights and promote strong boards have escaped similar criticism.

The $10.6tn asset manager said that it had voted on a record 867 shareholder proposals overall, but had found very few of those on environmental and social issues to be in the best interest of its clients.

Many of this year’s proposals were “overly prescriptive, lacking economic merit or asking companies to address material risks they are already managing”, wrote Joud Abdel Majeid, BlackRock’s global head of investment stewardship.

The number of no votes was lifted this year by BlackRock’s uniform opposition to 88 conservative-backed anti-ESG resolutions seeking to prevent companies from addressing such issues.

The world’s largest money manager voted in favour of 79 of the 374 governance proposals it considered, or 21 per cent, up from 11 per cent last year. Among the most common were proposals to introduce simple majority voting, rather than requiring a supermajority.

Environmental campaigners said they were disappointed by the continuing fall in BlackRock’s support for environmental issues.

“It is letting down the savers and pension holders who invest in its funds and want to protect their future against climate change,” said Lara Cuvelier, of the French pressure group Reclaim Finance.

BlackRock’s lack of enthusiasm for environmental and social proposals contributed to low overall support for such measures at many corporate annual meetings.

The median support for environmental and social shareholder proposals at Russell 3000 companies was 21 per cent and 18 per cent, respectively, this year, according to data from ISS-Corporate. Only two climate-related questions received majority support.

“The largest asset managers are trying to have their cake and eat it,” said Felix Nagrawala, who leads ShareAction’s research on investor voting. “Saying the resolutions don’t have economic merit doesn’t really hold water given that climate change will materially affect a whole range of different sectors.”

Globally, BlackRock supported 88 per cent of proposals put forward by the companies it invests in, including 82 per cent of those related to pay. It also backed 90 per cent of company-nominated directors, similar to its voting in previous years.

It said its main reasons for opposing directors were lack of independence, membership on too many boards and concerns about executive compensation.