US asset management giant BlackRock is likely to face a shareholder resolution from an NGO at its upcoming annual general meeting (AGM) urging it to divest two Chinese firms over claims that the firms are financing genocide in Syria and Sudan.
The resolution comes from Investors Against Genocide (IAG), a Boston-based group that has found that BlackRock, through its fund products, owns significant stakes in Chinese oil and gas firms PetroChina (6.8%) and Sinopec (7%).
According to IAG, the two Chinese companies are the “largest oil business partners” of Sudan and Syria, and as such funding genocide and other atrocities committed by the governments of those countries.
The group says this wholly contradicts BlackRock’s embrace of the Principles for Responsible Investment (PRI).
“BlackRock claims to consider ESG (environmental, social and governance) risks into its decision-making, but its maintaining of large holdings in PetroChina and Sinopec despite their connection to genocide is an inherent ESG risk,” the NGO said in its supporting statement for the resolution.
BlackRock is the latest major US finance house to be targeted by IAG, whose resolutions have in the past attracted support from leading institutional investors. The New York-based firm, with $4.6trn (€4.1bn) under management, has been a PRI signatory since 2008. A spokesman for BlackRock could not be reached; it will hold its AGM sometime in the second quarter.IAG’s mission has the support of faith investment body the Interfaith Center on Corporate Responsibility (ICCR) and actress and campaigner Mia Farrow.
Speaking to RI, Eric Cohen, IAG’s Co-Founder and Chair, said that once he notified BlackRock’s intention of floating the proposal late last year, the asset manager asked for a meeting to discuss. “But since then, we haven’t heard from them. We don’t know, for example, if they will turn to the SEC (Securities and Exchange Commission) to seek permission to omit the proposal.”
If that happens, Cohen says he’s confident that the NGO will prevail, as similar genocide-free shareholder resolutions it filed at BlackRock peers JPMorgan and Franklin Resources, the parent firm of Franklin Templeton Investments (FTI), were previously upheld by the SEC. Cohen added that if BlackRock agreed to divest the Chinese companies, IAG would be happy to withdraw its proposal.
Although IAG’s “genocide-free” proposals at JPMorgan and Franklin were defeated, several well-known responsible investors in the US, among them CalPERS, CalSTRS, the Florida State Board of Administration and Christian Brothers Investment Services (CBIS) voted in favour of them.
Since the NGO started its campaign, two big US investors, retirement services firm TIAA–CREF and fund manager T. Rowe Price, have divested companies said to have ties with regimes involved in genocide. In the current proxy season, IAG plans to file another genocide-free proposal at Voya Financial, the former US arm of ING. Link