BlackRock to face shareholder proposal on its ESG proxy voting record

Faith investor Mercy confirms plans to table proposal at AGM

BlackRock, the world’s largest asset manager, looks set to face a shareholder proposal on its ESG proxy voting, following criticisms over its “inconsistent” position on climate change.

US faith based investor Mercy Investments confirmed to RI its plans to file a resolution at the US investment behemoth “as part of a large coalition of concerned investors”.

Susan Makos, Mercy’s vice president of social responsibility, told RI that the coalition plans to file resolutions at “a number of managers” after reviewing their voting record this year on climate.

The proposed resolution, which appears on the Ceres database, calls on New York-listed BlackRock to review and publicly report on its “2019 proxy voting record”, evaluating “the company’s proxy voting policies and guiding criteria related to climate change”.

Makos said that the filing date for the resolution has not yet closed and that she expects other co-filers.

BlackRock’s CEO Larry Fink wrote in his annual letter that “as wealth shifts and investing preferences change, environmental, social, and governance issues will be increasingly material to corporate valuations”.

Despite this, the firm is reported to have voted in favour of just six out of 52 climate focused resolutions in 2019. A recent report by UK shareholder advocacy group ShareAction also found BlackRock to be close to the bottom in terms of support for climate proposals in 2019.

“We believe BlackRock’s CEO has shown leadership in calling for company CEOs to address risks such as climate change and are encouraging that the proxy voting be aligned with that call,” Makos told RI.Mercy describes BlackRock’s voting as “inconsistent with its statements about climate change to companies” in the resolution.

“This contradiction poses reputational risk for the company with both clients and investors. Moreover, proxy voting practices that ignore climate change seem to ignore significant company-specific and economy-wide risks associated with negative impacts of climate change,” it adds.

US SRI firm Boston Trust Walden filed a similar resolution three years ago at BlackRock. It is an issue the company has been engaged on for several years, Makos said.

She also describes the BlackRock resolution as “especially pertinent to Climate Action 100+ companies where BlackRock holds large stock positions”.

Despite 370 investors, representing over $35trn in assets, backing the global engagement initiative, large asset managers such as Blackrock, Vanguard and State Street have been notable by their absence.

A recent report by think-tank Climate Majority Project argued that several key climate-related shareholder proposals at US companies, some led by Climate Action 100+ members, would have passed had BlackRock and Vanguard supported them.

At RI Europe in June, Edward Mason, the head of responsible investment at the Church Commissioners, called on fellow asset owners to “put pressure” on large asset managers – including the ‘Big Three’ (BlackRock, Vanguard and State Street) who have not signed up to the Climate Action 100+ initiative or expressed support for its aims.

Blackrock had not commented at the time of writing.