BlackRock reduces support for shareholder sustainability proposals
BlackRock, the world’s largest asset manager, is providing less support to shareholders aiming to encourage companies towards more sustainable and socially responsible behavior. According to the firm, many of these proposals fall short during shareholder meetings.
BlackRock, the world’s largest asset manager, is providing less support to shareholders aiming to encourage companies towards more sustainable and socially responsible behavior. According to the firm, many of these proposals fall short during shareholder meetings. BlackRock’s stance on sustainable investing, particularly in the United States, has faced criticism for some time.
The asset manager backed almost 7% of sustainable and social proposals during shareholder meetings, according to a recently released report covering the period from July 2022 to June 2023. This represents a decline compared to the same period a year earlier, where BlackRock supported 22% of sustainability and social responsibility proposals. This marks the second consecutive year of decreasing support.
Joud Abdel Majeid, head of investment stewardship at BlackRock, noted that many of the proposals were unlikely to benefit long-term shareholder value due to being too far-reaching, economically insufficient, or redundant. The report explained that these factors led to diminished support from BlackRock and other shareholders compared to previous years.
As a fiduciary manager, BlackRock manages assets for its clients and prioritizes their interests, including institutional investors like pension funds, during shareholder meetings. The company manages over $9 trillion in total and ranks among the top five largest shareholders in the majority of companies listed in the US stock index S&P 500.
BlackRock’s support for sustainable proposals has dwindled despite a record number of such proposals globally. This increase was driven significantly by shareholders in the US market. However, the number of proposals that BlackRock could not support also grew.
BlackRock explained that many proposals focused on relevant issues but sought simplistic outcomes. Proposals deemed too restrictive or specific by the asset manager increased. Additionally, there were more plans targeting single issues without providing economic value to the company, often ignoring the fact that the company already complied with the request.
BlackRock has faced criticism from American investors and Republican politicians for its perceived environmental stance. Some frustrated clients in states like Texas even withdrew investments from the asset manager. BlackRock emphasized its significant investments in the energy industry, and in July, the CEO of oil company Saudi Aramco joined BlackRock’s board of directors.
CEO Larry Fink responded to criticism by pointing to the billions in new client assets entrusted to BlackRock. He emphasized that the situation is not black and white, acknowledging the challenge of balancing varying perspectives on the firm’s approach to sustainability.