BlackRock backing for investor proposals on ‘E’ and ‘S’ in ESG dwindles

BlackRock Inc. cut its support for investor proposals on environmental and social issues for a third consecutive year, the world’s biggest asset manager said in a report.

The New York-based asset manager said it supported around 4% of such shareholder resolutions, or 20 out of 493, in the year to June, when compared with about 7% of similar proposals, or 30 out of 455, that it had backed in the year-ago period.

“In our assessment, the majority of these (proposals) were over-reaching, lacked economic merit, or sought outcomes that were unlikely to promote long-term shareholder value,” It said in the “2024 Global Voting Spotlight” report. “A significant percentage were focused on business risks that companies already had processes in place to address, making them redundant.”

Many other proposals requested actions or disclosures by a company that were not consistent with clients’ long-term financial interests or that were “too prescriptive or unduly constraining on management,” it said.

From its observations during year, BlackRock said that it noticed an increase in shareholder proposals related to corporate political activities, particularly those requesting more information to demonstrate alignment between a company’s climate goals and their policy engagement efforts.

“Some proposals specifically called for companies to produce reports on their climate lobbying and related activities conducted through trade associations and coalitions,” it said.

BlackRock said that as an asset manager, its role is to help clients navigate investment risks and opportunities; “it is not our role to engineer a specific decarbonization outcome in the real economy.”

Of the 20 investor proposals that it supported this year, BlackRock said four were related to climate and natural capital, concerning disclosures at Berkshire Hathaway, Denny’s Corp., Jack in the Box, and Wingstop.

BlackRock’s approach to environmental, social, and governance (ESG) matters has drawn sharp criticism from some US Republican politicians, who have dubbed it “woke capitalism.”

The asset manager has said that would nudge company boards to focus on financial resilience, while also emphasizing the importance of managing the transition to a low-carbon economy for long-term success.

Meanwhile, on an overall global scale, BlackRock said it supported about 11% of shareholder resolutions, or 99 out of a total 867, in the year to June, when compared with about 9%, or 71 out of 811, in the year-ago period, “reflecting the continued poor quality of proposals put forward by shareholders.”