BlackRock has disclosed that it opposed shareholder proposals calling on McDonald’s and Chevron to undertake independent racial justice audits, despite committing to implement one of its own last year following shareholder pressure.
Resolutions calling for such audits emerged last year amid growing awareness of the Black Lives Matter movement, with most targeting US financial heavyweights.
The pioneering proposals, which were introduced by the likes of US-based SOC Investment Group, SEIU Capital Stewardship Program and Trillium Asset Management, achieved substantial support in their debut outings.
They prompted BlackRock to undertake its own racial equity audit, which resulted in a proposal filed at the investor being withdrawn. Citigroup, JP Morgan Chase and Amazon, which also received proposals last year, have since committed to undertake similar studies into their impact on racial justice.
Support for audit proposals has grown this year, with several achieving majority support, including the one at McDonald’s – 55 percent of investors backed the civil rights audit resolution at the US fast food giant on 26 May.
BlackRock was not among them, however; nor was it among the 47 percent of investors who supported a similar proposal put to oil giant Chevron on 25 May asking for an independent racial equity audit.
The proposal at McDonald’s, filed by SOC, asked the company to analyse its adverse impact on civil rights “above and beyond legal and regulatory matters, and to provide recommendations for improving the company’s civil rights impact”.
In its voting bulletin on McDonald’s, BlackRock acknowledged that such audits can be beneficial. However, it did not support this one as “McDonald’s current disclosure provides clear, fulsome information to enable stakeholders to track the effectiveness of the company’s diversity, equity and inclusion (DE&I) efforts, and their stated goals provide insight into the company’s ongoing priorities”.
SOC’s executive director, Dieter Waizenegger, expressed surprise at BlackRock’s opposition, “given that BlackRock itself is undergoing a racial equity audit, which came out of a shareholder proposal, and it had previously expressed broad support for the proposal”.
Waizenegger told Responsible Investor via email that BlackRock’s bulletin on McDonald’s “seems to misunderstand the proposal, which is about much more than disclosure and DE&I”. The resolution, he added, is asking for an assessment of the “effectiveness of a company’s policies, practices and products in addressing inequality both internally and externally”.
Among the supporters of the McDonald’s proposal were Californian public pension giants CalPERS and CalSTRS, as well as Norges Bank Investment Management (NBIM), the manager of Norway’s trillion-dollar sovereign wealth fund.
BlackRock has supported civil rights audit proposals in the past, including at Johnson & Johnson last year. This year, a similar proposal calling for a racial equity audit was supported by around 61 percent of investors at the US pharma giant, close to doubling the tally the year before.
In its bulletin on the 2021 Johnson & Johnson proposal, BlackRock said that while it recognised and supported the “considerable efforts” the company had made on diversity and racial equity, “we believe that an audit would complement the company’s current programs to advance racial equity and might yield further insights to accelerate its progress”.
On Chevron, BlackRock stated in its voting rationale that it did not support the call for a racial equity audit in part because claims in the supporting statement appeared to be “unsubstantiated and potentially inaccurate”, which “undermine the request for a racial equity audit and distract from the purpose of such a report”.
The proposal at Chevron, which was also supported by CalSTRS, CalPERS and NBIM, was filed by US faith investor Sisters of St Francis of Philadelphia.
On Monday, it was reported that BlackRock’s chief Larry Fink had told Bloomberg TV that the fund would not act as the “the environmental police”, stressing that it was not the role of the private sector to make sure portfolio companies are doing their part to combat climate change.
His words come after the investment giant published a memo last month warning 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”.