In a new report released Wednesday, the world’s largest asset manager BlackRock confirmed it supported a smaller share of environmental, social, and governance (ESG) shareholder proposals this year compared to years past.
In its 2023 global voting spotlight, BlackRock revealed it supported about 9% of all shareholder resolutions it voted on globally during the 2022-23 proxy voting season, including 7% of 399 resolutions on issues including climate and the environment and social considerations.
That’s a steep drop from the 2021-22 proxy year, when the company supported 21% of all ESG shareholder proposals put to a vote, and 47% of 172 proposals the year before.
“Because so many proposals were over-reaching, lacking economic merit, or simply redundant, they were unlikely to help promote long-term shareholder value and received less support from shareholders, including BlackRock, than in years past.”
BlackRock 2023 Global Voting Spolight
The cutback on support for ESG proposals is notable as BlackRock, with $9.4 trillion under management, continues to backpedal from CEO Larry Fink’s highly publicized commitment back in 2020 to incorporate ESG factors into investment decisions.
In today’s report, BlackRock notes that while these was a 30% increase ESG shareholder proposals in the past year, many of the resolutions called for changes that would not be helpful to companies in its funds.
“Because so many proposals were over-reaching, lacking economic merit, or simply redundant, they were unlikely to help promote long-term shareholder value and received less support from shareholders, including BlackRock, than in years past,” the report states.
The report said BlackRock continued to engage with companies on sustainability-related factors that are material to their business models, including management of potential risks associated with climate and natural capital, as well as the impacts of a company’s operations on their workforce, and broader value chain.
“We were encouraged by the disclosure improvements companies have made to help investors understand how they are navigating material risks and opportunities arising from these factors,” the report said, citing challenges of energy companies in particular as they sought to balance the immediate national and societal demand for energy security and affordability, with their long-term plans to invest in technologies that will enable them to continue to be successful as the world transitions to a lower carbon economy.
“By and large, companies garnered support from shareholders for their actions to balance these important—but sometimes competing—objectives. We continue to believe that companies would benefit from greater clarity in public policy to support their decision-making on these issues. This, in turn, would allow these companies to provide shareholders more transparency about their strategies.”
BlackRock’s waning support for ESG proposals comes at a time when the subject of ESG investing is under increasingly heavy fire, with critics claiming ESG’s impact and returns are difficult to measure. They also point to higher fees that investment firms charge for ESG investments as a driving factor for offering the option.
At the Aspen Ideas Festival this past June, BlackRock’s Fink said he has stopped using the term “ESG” altogether as an investing term, saying it has become “entirely weaponized” and “misused by the far left and weaponized by the far right.” Republicans have repeatedly attacked the merits of ESG initiatives for advancing a “woke capitalism” liberal agenda, and say BlackRock has over-emphasized sustainability issues, citing past proxy votes. Democrats, meanwhile, continue to steadfastly defend ESG initiatives.
But in Aspen this summer, Fink also said that dropping references to ESG would not stop the firm from continuing to talk to companies it has stakes in about decarbonization, corporate governance and social issues “if that’s something we need to address.”
SEE ALSO:
• BlackRock’s Fink Defends ESG Agenda, Says It’s Not ‘Woke’
• BlackRock Bows to Climate Change, Will Put ESG ‘Front and Center’
• Does ESG-Based Proxy Voting Matter? Just Ask ExxonMobil