In their annual global voting spotlight report published Wednesday, BlackRock's investment stewardship team — which makes voting decisions on both management and shareholder proposals on behalf of BlackRock's clients — attributed its large number of “no” votes this year to several factors, including a huge influx of shareholder proposals.
The vast majority were deemed to be "poor quality" by the BIS team, either because they were "lacking economic merit," were "overly prescriptive" and "sought to micromanage a company's strategy," or were simply redundant, asking a company to do something it had already done, the report said.
BlackRock's support for management proposals, however — which accounted for more than 99% of the roughly 172,000 proposals voted on by BIS — remained high at 88%.
BlackRock's trend of voting against shareholder proposals is largely in line with the wider market — median shareholder support for environmental and social proposals in the U.S. fell sharply from 25% in 2022 to just 15% in the 2023 proxy year.
But the firm's latest report may indicate reluctance to be connected to so-called ESG investing.
Once a vocal proponent of the sustainable investing strategy — which accounts for environmental, social and governance factors — BlackRock founder and CEO Larry Fink has backed away from the term in recent months after a wave of backlash from both sides of the political spectrum.
Republican politicians have been probing the company's business dealings and asking conservative-leaning state pension funds to divest from BlackRock, which they say has unfairly excluded the energy sector in pursuit of a climate agenda.
Meanwhile, environmental activists have lambasted Mr. Fink and his company for not doing enough to stop climate change, protesting in front of BlackRock's headquarters and heckling senior executives at public speaking engagements.
Voting "no" on the overwhelming majority of ESG proposals is yet another sign that Mr. Fink — and BlackRock as a whole — are plotting a much more careful course amid public scrutiny.
The firm highlighted case studies showing how and why it voted for and against the proposals.
For example, BIS did not support shareholder proposals requesting reporting on plastics use at the 2023 annual meetings for Amazon.com Inc., Exxon Mobil Corp., The Phillips 66 Co., and YUM! Brands Inc. — either because the companies already provided sufficient information, or the proposal was “overly prescriptive.”
However, BIS did support a shareholder proposal at Westlake Corp. that requested a report on plastic production and pollution. And at Cintas Corp.'s October 2022 annual meeting, BIS voted “yes” on a proposal requesting a report on political contributions.
BlackRock also voted against executive compensation awards at Broadcom, Live Nation and Carnival Cruise Lines, as well as "front-loaded" pay packages at Dollar Tree and Hertz Global.
The latest voting report comes a month after BlackRock said it would be expanding its voting choice program — which currently allows some institutional investors to vote their own shares — to holders of its largest ETF, including retail customers.
The New York-based asset management firm had $9.43 trillion in assets under management as of June 30.