BlackRock cuts backing for climate shareholder proposals

BlackRock reduced its support for shareholder proposals on environmental and social issues for a third straight year, arguing that many of the efforts lacked merit and harmed long-term financial interests while doing little to improve companies.

The world's biggest asset manager backed 4% of 493 such proposals in the 12 months through June, New York-based BlackRock said in a report Wednesday. That's down from 7% a year earlier and more than 20% in the same period through mid-2022.

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The firm, which said in January that its stewardship team was focused on the financial health of corporations, increased its support for resolutions on corporate governance — the "G" in ESG investing. BlackRock supported 21% of such proposals in the period, up from 11% a year earlier, according to the report.

BlackRock said shareholder proposals overall face considerable opposition because they're of "poor quality or unconnected to how a company delivers long-term shareholder value."

Many proposals are filed by advocacy organizations targeting U.S. companies regardless of the specifics, BlackRock said.

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"Investors found the majority of these proposals to be overly prescriptive, lacking economic merit, or asking companies to address material risks they are already managing," Joud Abdel Majeid, global head of investment stewardship, wrote in the report, referring to social and environmental proposals.

BlackRock, which managed $10.6 trillion of assets at midyear, is a top-five shareholder in the vast majority of S&P 500 companies and has drawn intense scrutiny from U.S. investors and politicians for how it votes and engages with corporations on hot-button ESG issues. Overall, the firm supported companies' management on about 88% of total proposals globally.

Republicans have sharply criticized BlackRock's advocacy of ESG or sustainable investing as harming the economies of states with significant energy industries, such as Texas and West Virginia. The backlash led some state pensions and treasurers, as well as a Texas fund for public schools, to yank capital from the firm.

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BlackRock has long maintained that it does not boycott fossil fuels, and the company said earlier this year that it managed more than $300 billion in global energy investments.

Money managers across the industry reduced their support for environmental and social resolutions in the past year, including those pushed by anti-ESG campaigns. Average support for the resolutions fell to 16% in the most recent proxy year from 19% in the prior year, according to Morningstar.