The world's largest asset managers, BlackRock and Vanguard Group, are not pressing companies on climate action as much as the asset managers' investors would like, according to Majority Action's annual report on how asset manager voting shaped corporate climate action in 2020 released Tuesday.
The report, "Climate in the Boardroom: How Asset Manager Voting Shaped Corporate Climate Action in 2020," assesses how the 12 largest global asset managers with a collective $27.7 trillion in assets under management hold companies accountable for fighting climate change and the risks to shareholders.
Majority Action measured how the asset managers voted on director elections and say-on-pay votes at industries critically tied to climate impacts, as well as performance on climate-related shareholder proposals.
The report found that BlackRock and Vanguard voted for 99% of company-proposed directors in the energy, utility, banking and automotive sectors reviewed in this report and voted "overwhelmingly" against climate-related shareholder resolutions.
BlackRock CEO Laurence D. Fink has pledged to make climate change central to the firm's investment strategy, "and yet they are doing everything except the things that matter the most," said Eli Kasargod-Staub, Majority Action executive director, in an interview.
"We are definitely seeing other asset managers taking stronger stances. What gives me hope is that institutional investors are seeing it and saying that this kind of approach is no longer acceptable," Mr. Kasargod-Staub said.
A BlackRock spokesman said in a statement: "BlackRock investment stewardship focuses on advocating for the corporate governance and business practices that add to the value of our clients' investments — that means both engagement and voting.
"Our engagement stats are up meaningfully across E, S and G. We have transformed our disclosure as a stewardship team by publishing more voting bulletins than ever before. Our recently published reports provides greater transparency to our clients and other stakeholders about how we are meeting our commitment to drive enhanced climate risk reporting. We have increased our votes against directors, underscoring our sustained focus on director accountability globally. And, we have one of — if not the largest — global stewardship teams reflecting BlackRock's commitment to making informed voting decisions and providing constructive feedback to support long-term value creation.
"In addition, it's worth noting that not all shareholder proposals are created equal, and it would be wrong to equate good governance with voting against management without regard for a proposal's impact. Blindly supporting proposals is not a responsible approach to stewardship."
A separate statement from Vanguard said, "Vanguard cares deeply about the impact of climate change on our investors' long-term value, and we continue to engage with company leaders and boards on this important issue. Proxy voting, while important, does not reflect the full extent of our actions with companies on the material risks associated with climate change and other environmental or social issues. Through our engagements, we have been encouraged by the progress and steps companies have taken to address issues where material risk is present, but recognize there is still significant work to be done."
