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BlackRock’s support for shareholder proposals on environmental and social issues fell sharply for the second year in a row as it refused to back resolutions it deemed too didactic or pointless.
The world’s largest money manager voted in favour of just 26 such proposals globally at companies’ annual meetings in the 12 months to June, equivalent to roughly 7 per cent of the total.
That represented a significant decline from last year, when it backed 22 per cent globally, and the 2021 proxy season, when it voted in favour of 47 per cent.
Its scepticism comes as the $9.4tn asset manager contends with sustained attacks from Republicans in the US accusing it of being too “woke”. Earlier this year, Larry Fink, the firm’s chief executive, said he had stopped using the acronym ESG — the catchall term for such proposals — because it had been “weaponised” by political figures on both the right and the left.
However, BlackRock’s pullback also coincides with a jump in the number of ESG shareholder proposals made possible by a change in the Securities and Exchange Commission’s policies, which mean it is harder for companies to block them.
This year, a record 340 ESG proposals have already been voted on in the US, up from 300 in all of 2022, according to Institutional Shareholder Services, the proxy voting group.
In a report on its voting record published on Wednesday, BlackRock said its support had fallen “because so many shareholder proposals were overreaching, lacking economic merit, or simply redundant”.
For example, BlackRock in 2022 voted in favour of Amazon having to produce a report on its use of plastic packaging. However, it voted against a similar proposal this year because it said the ecommerce group had started to disclose information.
Other shareholders followed suit, with this year’s plastic packaging proposal garnering less than one-third of shareholder support versus nearly half in 2022.
Indeed, BlackRock argued that its declining support for ESG proposals was reflective of a broader pullback among investors. The median support for these resolutions fell to 15 per cent in 2023 from 25 per cent in 2022 and 32 per cent in 2021, according to BlackRock and ISS data.
However, while rival State Street also refused to back as many proposals, the decline was not as pronounced. The Boston-based asset manager, which publishes its voting record using a different timeline, backed 32 per cent of ESG resolutions in the first half of this year, down from 44 per cent in the same period of 2022 and 49 per cent in 2021.
State Street also cited the SEC’s policy change as a factor behind the decline.
Along with Vanguard, BlackRock and State Street control between 15-20 per cent of most large US public companies because of their huge index trackers and investment funds.
Vanguard, which has not yet published a figures on its 2023 proxy votes, declined to comment.
The drift away from corporate social responsibility comes as asset managers and companies have been attacked by Republicans. Last year, several Republican state attorneys-general demanded details of BlackRock’s voting policy, which they said was hurting the oil and gas sector.
In its voting report, BlackRock said it declined to support shareholder proposals at ExxonMobil and other oil companies this year demanding reports on various projects or plans to decommission them.
BlackRock’s figures do not include its support for 30 resolutions proposed by company management that require climate disclosures known as “say on climate” reports.
Where “say on climate” resolutions were proposed by shareholders and opposed by management, BlackRock said it voted against them.