BlackRock hit by backlash after fall in environmental and social votes

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Liberal-leaning US pension fund leaders and politicians have warned BlackRock and different massive asset managers in opposition to backtracking on their dedication to environmental, social and governance causes, after a pointy drop in assist for shareholder proposals at annual conferences.

New York Metropolis comptroller Brad Lander accused BlackRock, the world’s largest cash supervisor, of caving in to a “misinformed and shortsighted struggle in opposition to ESG on the behest of particular pursuits”.

His feedback got here after knowledge launched this week confirmed that BlackRock voted in favour of simply 7 per cent of environmental and social-related proposals at firm annual conferences within the 12 months to June.

The $9.4tn asset supervisor has been a frequent goal of assaults from US Republicans who’ve accused it of turning into too “woke”, and chief government Larry Fink stated earlier this 12 months he had stopped utilizing the time period ESG as a result of it had change into too divisive.

BlackRock denies the criticism influenced its voting report. Investor assist for shareholder proposals has fallen throughout the board since a rule change in 2021 made it tougher for corporations to dam their inclusion on proxy ballots. Nevertheless, the decline at BlackRock has been significantly sharp.

The median assist for environmental and social shareholder proposals to this point this 12 months has fallen to fifteen per cent, based on Institutional Shareholder Companies knowledge, from 25 per cent final 12 months and 32 per cent in 2021. BlackRock supported 47 per cent of such proposals in 2021 and 22 per cent final 12 months.

Michael Frerichs, the Illinois state treasurer, stated: “We wish to be certain they’re dedicated to addressing the dangers, and we predict it’s necessary everybody we work with is managing danger responsibly and isn’t letting political strain affect the service they supply.

“We perceive that there are years the place there are lower-quality proposals, but when this turns into a development over a number of years, then we’ll be involved,” Frerichs added.

Tobias Learn, treasurer for the state of Oregon, didn’t remark immediately on BlackRock’s newest knowledge however stated he could be emphasising “the significance of recognising the dangers that ESG points pose” to “all our companions and the businesses we put money into”. Oregon invests a whole lot of thousands and thousands of {dollars} into BlackRock funds and owns a direct stake within the asset supervisor, based on filings.

Some institutional traders make their very own voting choices at shareholder conferences fairly than delegate the accountability to fund managers. The New York Metropolis and Massachusetts retirement programs, for instance, stated that they vote primarily based on their very own tips.

Nevertheless, many do hand off accountability. Asset administration giants BlackRock, Vanguard and State Avenue collectively management the shares of between 15 and 20 per cent of many S&P 500 corporations, giving them vital sway over the end result of proxy votes.

“BlackRock has a accountability to make use of its votes to ship a transparent and constant message concerning the necessity to handle climate-related and human-capital associated dangers,” stated New York Metropolis’s Lander, who’s chargeable for about $250bn of investments throughout 5 pension funds.

BlackRock declined to touch upon its relationships with New York Metropolis and different purchasers. Nevertheless it stated: “Our proxy voting choices are made solely to advance the monetary pursuits of our purchasers. For purchasers who want to play a extra lively function in proxy voting themselves, we even have led the trade in offering them that choice by means of our Voting Alternative initiative.”

The cash supervisor stated earlier within the week that its falling assist for climate-related votes was a response to the proliferation of inappropriate proposals.

“Whereas BlackRock will get all the eye I don’t suppose they’re alone,” stated Amy Borrus, government director of the Council of Institutional Traders, an trade group. “Many asset managers report that they voted for fewer environmental shareholder proposals this 12 months than final 12 months as a result of they’re seeing too many granular . . . [or] overly prescriptive proposals.”