BlackRock voted in favor of 4% of shareholder proposals focused on social and environmental issues for the proxy year through June 30, down from 7% the year before and more than 20% for the 12 months through June 2022, according to an Aug. 21 report from the company.
The report showed BlackRock voting in favor of only four shareholder proposals on climate and natural capital out of 161 proposals globally, and 16 of 332 focused on company impacts on people.
For governance, by contrast — the final leg of the ESG stool — BlackRock supported 79 out of 374 shareholder proposals globally, almost double the 41 proposals the money management giant backed the year before.
BlackRock’s report said its low level of support for “E” and “S”-related proposals reflected continued concerns that they were “of poor quality or unconnected to how a company delivers long-term shareholder value.”
Another mitigating factor: the growing number of anti-ESG shareholder proposals brought up for a vote over the past year, 88, up from 57 the year before, none of which BlackRock supported, the report noted.
Lindsey Stewart, director of investment stewardship research with Morningstar Sustainalytics, called the latest BlackRock numbers a mixed bag at this point.
On the one hand, Stewart said, the fact that more and more shareholder proposals over the past year are narrowly focused and, perhaps, overly prescriptive could be a sign of success — that many of the big picture issues shareholders had been pushing for in recent years are “pretty much on the statute books” already.
If, instead, BlackRock’s latest numbers herald a broader retreat, those “shifts could have profound implications for corporate governance and the prioritization of ESG issues,” according to a Morningstar note on BlackRock’s latest report.
BlackRock’s report said the firm’s proxy voting team found a majority of proposals over the past year addressing climate change and social-related issues “were overreaching, lacking economic merit, or sought outcomes that were unlikely to promote long-term shareholder value.”
A significant percentage “were focused on business risks that companies already had processes in place to address, making them redundant,” the report said.
Meanwhile, none of the four climate-related proposals BlackRock supported last year involved fossil fuel-related companies, a political sore point for a number of U.S. states, led by Texas and Florida, which claimed BlackRock was boycotting their firms – despite BlackRock investing hundreds of billions of dollars in energy companies globally.
BlackRock’s report noted that the climate-related proposals it backed — at Berkshire Hathaway, Denny’s, Jack in the Box and Wingstop — were aimed at addressing “gaps in these companies’ disclosures.”
With the increase in the number of governance-related proposals BlackRock supported more than offsetting the drop in environmental and social-focused proposals, the firm said it backed 11% of shareholder proposals last year, or 99 out of 867 globally, up from 9% the year before.
Altogether, BlackRock said it voted on more than 169,200 proposals from management and shareholders at more than 18,300 shareholder meetings across 67 markets globally. The report said BlackRock supported 88% of management recommendations. Shareholder proposals accounted for less than 1% of the global total.
BlackRock reported that clients with $634 billion in assets are now using the “Voting Choice” program the firm introduced a few years ago to vote their own shares, up from $586 billion the year before.
