BlackRock at odds with peers, asset owners and proxy firms over Japanese climate proposals

Investor behemoth opposed pioneering resolutions filed at J-Power by Amundi, Man Group and HSBC AM, arguing they were “overly prescriptive” and “unduly restricting”.

BlackRock has revealed it voted against climate proposals filed at Japanese utility J-Power by Amundi, Man Group and HSBC Asset Management, arguing that the demands from its peers were “overly prescriptive [and] unduly restricting on management’s ability to make business decisions”.   

Its position put BlackRock at odds with big proxy advisers and several of the largest US asset owners, not to mention the filers of the proposals, which represent combined assets under management of around $3 trillion. 

California’s CalPERS and the Office of the New York City Comptroller, which oversees the city’s five pension pots, supported all three proposals, as did influential proxy firm ISS. 

ISS’s rival Glass Lewis and the other Californian pension giant CalSTRS supported two out of three of the proposals, opposing the one on disclosure around pay. 

The three proposals, which went to the vote on 28 June, asked Japan’s largest operator of coal-fired power stations – also known as the Electric Power Development Company – to amend its articles to formulate and disclose a Paris Agreement-aligned business plan with targets, as well as disclosing how future capital expenditure will align with that strategy and how remuneration policies facilitate the achievement of emissions reduction goals. 

None achieved the two-thirds majority needed. The closest to that threshold was the 26 percent support for the Paris-aligned strategy and emissions reduction targets. The other two saw support of around 20 percent.  

BlackRock revealed its position on the proposals in a voting bulletin published last week, stating: “Given that the company has provided disclosures aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) framework since 2020, as well as the progress achieved against their 2050 decarbonisation strategy to date, [BlackRock Investment Stewardship] did not support the shareholder proposals.” 

By contrast, ISS stated that the proposal calling for a Paris-aligned business strategy and targets did “not appear to be unduly burdensome or overly prescriptive”. 

The proxy adviser twice repeats in the advice that, in light of the company’s already high GHG emissions and the lack of a concrete plan to retire old coal power facilities, and its stranded asset risk, “it is in shareholders’ interest to better understand how the company intends to remain viable in the long term”. 

Similarly, Glass Lewis argued that the proposals on a Paris-aligned strategy and targets and capex “are not overly onerous given the company’s current suite of climate-related commitments and targets already maintained by the company”. It added that its support in this instance was given despite an overall reticence about proposals requesting amendments to companies’ articles.  

Glass Lewis rejected the proposal on remuneration over concerns that “disclosure against this narrow aspect of compensation – without the context of other compensation-related disclosure – could paint a potentially misleading picture of how the company’s climate goals are being incentivised and, crucially, achieved”. 

Last month, BlackRock revealed it had halved its support for environmental and social (E&S) shareholders proposals in the US in the 2022 proxy season. In its 2022 voting bulletin, the manager said it had supported 24 percent of proposals this year, down from 43 percent last year. At the same time, it noted that average support had fallen from 36 percent to 27 percent – indicating it was not alone in cutting support.  

In May, BlackRock warned in a memo that it would oppose more climate proposals this year, arguing that they have become “more prescriptive or constraining on companies and may not promote long-term shareholder value”. 

Following the recent shift at the US Securities and Exchange Commission (SEC), BlackRock claimed it had seen “a marked increase in environmental and social shareholder proposals of varying quality coming to a vote”. It said its “early assessment is that many of the proposals coming to a vote are more prescriptive and constraining on management than those on which we voted in the past year”.  

Based on the vote at J-Power, it seems that BlackRock’s stance applies beyond the borders of the US.  

The proposal at the coal-powered utility was the first time institutional investors had filed a shareholder resolution in Japan, a country that has only recently seen the emergence of climate proposals in its corporate governance landscape. The first was filed in 2020 at Mizuho Financial Group by climate campaigners Kiko Network, securing 34 percent support.   

Amundi, Man Group and HSBC AM collaborated on the resolutions with influential Aussie-based non-profit, the Australasian Centre for Corporate Responsibility (ACCR), a seasoned and prolific filer of ESG shareholder proposals. 

Both Amundi and Man Group declined to comment on the voting position of BlackRock on their proposals. HSBC AM had not responded at the time of writing.