BlackRock won't back climate shareholder proposals it considers too prescriptive

BlackRock will not support climate-change shareholder votes that seek to micromanage a company's climate-change programs, the company said in its 2022 investment stewardship report released Tuesday.

"Having supported 47% of environmental and social shareholder proposals in 2021 (81 of 172), BIS (BlackRock Investment Stewardship) notes that many of the climate-related shareholder proposals coming to a vote in 2022 are more prescriptive or constraining on companies and may not promote long-term shareholder value," the report said.

In 2020, BlackRock supported 9% of environmental and social shareholder proposals.

The firm also stressed "the nature of certain shareholder proposals coming to a vote in 2022 means we are likely to support proportionally fewer this proxy season than in 2021, as we do not consider them to be consistent with our clients' long-term financial interests."

BlackRock said that in 2021 "we observed a shift in climate-related shareholder proposals with requests that addressed material business risks or that were anchored in reports providing information which would be useful to investors in assessing a company's ability to generate durable, long-term value."

The report said the firm is more likely to support shareholder proposals that are consistent with the company's request to deliver information that helps to understand the material risks and opportunities companies face.

BlackRock stressed in the report that "we are not likely to support those (shareholder proposals) that in our assessment, implicitly are intended to micromanage companies. This includes those that are unduly prescriptive and constraining on the decision-making of the board or management, call for changes to a company's strategy or business model or address matters that are not material to how a company delivers long-term shareholder value."

BlackRock is setting the tone for the current proxy season as a record number of U.S. shareholder resolutions — more than 250 — related to environmental and social issues will be put to a vote.

BlackRock also said regulatory and geopolitical dynamics have shifted since last year, highlighting new guidance on social policy issues from the U.S. Securities and Exchange Commission and the fallout on energy markets from Russia's invasion of Ukraine.

Among the proxy vote themes BlackRock said it had identified regarding environmental and social themes this year are proposals to cease providing financing to traditional energy companies; decommissioning the assets of traditional energy companies; changing articles of association or corporate charters to mandate climate-risk reporting or voting; and directing climate lobbying activities; and policy positions or political spending.

BlackRock said "in conclusion, BIS is focused on supporting companies as they address material business challenges they face, including the decades-long transition to a low-carbon economy."

BlackRock managed $9.6 trillion as of March 31.

Bloomberg contributed to this story.