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Blackrock seeks to dodge proposal on Business Roundtable commitments

Investment giant joins US banks in ‘no action’ request

Blackrock has become the latest US financial giant seeking to evade a shareholder proposal calling on it to outline how it will make good on its recent Business Roundtable commitments. 

Filed by US non-profit As You Sow, the resolution calls on the asset management behemoth to report on how it plans to “fully implement” the recent ‘Statement on the Purpose of a Corporation’ put out by US trade group the Business Roundtable (BRT) last year and signed by Blackrock’s Chairman and CEO Larry Fink.

Published in August, the BRT’s statement, which was signed by 181 US CEOs, advocated for a shift towards a stakeholder model of capitalism and away from the shareholder primacy model famously attributed to Milton Friedman.

It included a commitment to respect “the people in our communities and protect the environment by embracing sustainable practices across our businesses”.

Earlier this month, Blackrock received widespread praise and column inches for the numerous sustainability pledges its CEO Larry Fink made in his annual letter to clients and for its decision to join Climate Action 100+, the investor engagement initiative that is attempting to steer the world’s dirtiest companies towards Paris aligned trajectories.

The world’s largest asset manager is also facing another shareholder resolution over its poor ESG proxy voting record.

In a ‘no action’ request filed at the US Securities and Exchange Commission (SEC) this week, Blackrock’s lawyer argues that the proposal concerning the BRT is overly prescriptive and refers to matters “best left to the judgement of Blackrock’s Board of Directors…and management”.

The ‘ordinary business’ grounds for exclusion was also invoked by US banking giants JP Morgan, Citi, Bank of America and Goldman Sachs in their attempts to rebuff a similar resolution on their BRT commitments. 

‘No-action letters’ from the SEC provide assurances to companies that the regulator will not pursue the matter if the company omits a proposal from the agenda of its annual shareholder meeting.

In the SEC filing, Blackrock points to the public Sustainability Accounting Standards Board (SASB) based disclosure it made this month and its commitment to disclosing against the Task Force on Climate-related Financial Disclosures (TCFD) as examples of its transparency on “sustainability-related questions”.

BlackRock concludes its letter by adding that “should the [SEC] Staff disagree with the conclusions” in its letter, the company “would appreciate the opportunity to confer with the Staff concerning these matters prior to the issuance of the Staff’s response”.

Blackrock’s request is interesting when the consensus among the US SRI investors RI spoke to last year is that the SEC’s ‘no action’ process is notoriously opaque. 

Blackrock had not commented at the time of writing.