A report released by the world’s biggest asset manager BlackRock has revealed that it has further cut support for ESG (Environmental, Social & Governance) shareholder resolutions, backing just 4% over the past 12 months. BlackRock’s recent announcement stated that of the 493 environmental and social proposals put forward by shareholders in the 12 months through to June, it supported just 20 - equivalent to 4%. This represents a continual decline over the past few years, when back in 2021, BlackRock supported a record 47% of environmental and social resolutions, this then fell to 22% in 2022, and 7% in 2023.
Shareholder proposals often call on companies to quantify their environmental risks, provide greater data on emissions, or set out risk mitigation plans, with these rising in recent years- for example a total of 455 were seen in 2023 with this growing to the 493 recorded in June this year. Regions where corporations are not mandated to disclose climate data, such as the US, are more likely to see such shareholder action, compared to regions with heavier regulation.
BlackRock said that the most recent shareholder proposals showed “many of the same themes we observed last year around non-governance shareholder proposals persisted in the 2023-24 proxy year.”[i] They reported that shareholder proposals in the US focused on climate and natural capital risks, as well as social aspects around company impacts on their employees and communities. However, similar to last year, BlackRock claims that investors found the majority of these proposals to be overly prescriptive, lacking economic merit, or asking companies to address material risks they are already managing: “As a result, these proposals continued to receive low support from shareholders, including BlackRock”.
BlackRock claimed that ultimately the reason for the decline in support for ESG resolutions was that: “A significant percentage of shareholder proposals were focused on business risks that companies already had processes in place to address, making them redundant. Others requested actions or disclosures that were inconsistent with our clients’ long term financial interests, or that were too prescriptive or unduly constraining on management”[ii].
However, advocacy groups have voiced concern over BlackRock’s stance, with Felix Nagrawala, financial sector research manager at ShareAction, suggesting that BlackRock should be held to account, saying: “If other investors and the largest proxy voting advisors can take a much more progressive approach, why should the world’s largest asset manager be let off the hook?”
Nagrawala added: “Our research has shown BlackRock has repeatedly been one of the worst performers in recent years and seen its support of resolutions plummet. While they say the resolutions are too prescriptive and lack merit, in reality, we found most resolutions (three quarters in 2023) were just asking for more disclosure – hardly too much to ask for companies when it comes to systemic risks like climate change that is in the long-term interests of its clients.”[iii]
BlackRock’s stance this summer contrasts with that seen just a few years prior, where in his annual letter to investors in 2020, BlackRock CEO Larry Fink praised climate-aligned portfolios stating that “Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.”[iv]
Yet in his 2024 letter to investors, Larry Fink did not mention ESG or social sustainability at all. He also advocated for “energy pragmatism”, including investment in new fossil fuels and new clean energy.
[i] 2024-investment-stewardship-voting-spotlight.pdf (blackrock.com)
[ii] 2024-investment-stewardship-voting-spotlight.pdf (blackrock.com)
[iv] Larry Fink's Letter to CEOs | BlackRock
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
.jpg)
