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Liberal-leaning US pension fund leaders and politicians have warned BlackRock and different large asset managers in opposition to backtracking on their dedication to environmental, social and governance causes, after a pointy drop in help for shareholder proposals at annual conferences.
New York Metropolis comptroller Brad Lander accused BlackRock, the world’s largest cash supervisor, of caving in to a “misinformed and shortsighted struggle in opposition to ESG on the behest of particular pursuits”.
His feedback got here after knowledge launched this week confirmed that BlackRock voted in favour of simply 7 per cent of environmental and social-related proposals at firm annual conferences within the 12 months to June.
The $9.4tn asset supervisor has been a frequent goal of assaults from US Republicans who’ve accused it of turning into too “woke”, and chief govt Larry Fink stated earlier this yr he had stopped utilizing the time period ESG as a result of it had change into too divisive.
BlackRock denies the criticism influenced its voting file. Investor help for shareholder proposals has fallen throughout the board since a rule change in 2021 made it tougher for corporations to dam their inclusion on proxy ballots. Nonetheless, the decline at BlackRock has been notably sharp.
The median help for environmental and social shareholder proposals up to now this yr has fallen to fifteen per cent, in accordance with Institutional Shareholder Companies knowledge, from 25 per cent final yr and 32 per cent in 2021. BlackRock supported 47 per cent of such proposals in 2021 and 22 per cent final yr.
Michael Frerichs, the Illinois state treasurer, stated: “We need to ensure they’re dedicated to addressing the dangers, and we expect it’s necessary everybody we work with is managing threat responsibly and isn’t letting political stress affect the service they supply.
“We perceive that there are years the place there are lower-quality proposals, but when this turns into a pattern over a number of years, then we’ll be involved,” Frerichs added.
Tobias Learn, treasurer for the state of Oregon, didn’t remark straight on BlackRock’s newest knowledge however stated he could be emphasising “the significance of recognising the dangers that ESG points pose” to “all our companions and the businesses we spend money on”. Oregon invests a whole lot of thousands and thousands of {dollars} into BlackRock funds and owns a direct stake within the asset supervisor, in accordance with filings.
Some institutional buyers make their very own voting selections at shareholder conferences somewhat than delegate the accountability to fund managers. The New York Metropolis and Massachusetts retirement programs, for instance, stated that they vote based mostly on their very own pointers.
Nonetheless, many do hand off accountability. Asset administration giants BlackRock, Vanguard and State Road collectively management the shares of between 15 and 20 per cent of many S&P 500 corporations, giving them vital sway over the result of proxy votes.
“BlackRock has a accountability to make use of its votes to ship a transparent and constant message relating to the necessity to handle climate-related and human-capital associated dangers,” stated New York Metropolis’s Lander, who’s answerable for about $250bn of investments throughout 5 pension funds.
BlackRock declined to touch upon its relationships with New York Metropolis and different shoppers. Nevertheless it stated: “Our proxy voting selections are made solely to advance the monetary pursuits of our shoppers. For shoppers who want to play a extra lively position in proxy voting themselves, we even have led the business in offering them that possibility by way of our Voting Choice initiative.”
The cash supervisor stated earlier within the week that its falling help for climate-related votes was a response to the proliferation of inappropriate proposals.
“Whereas BlackRock will get all the eye I don’t suppose they’re alone,” stated Amy Borrus, govt director of the Council of Institutional Buyers, an business group. “Many asset managers report that they voted for fewer environmental shareholder proposals this yr than final yr as a result of they’re seeing too many granular . . . [or] overly prescriptive proposals.”