BlackRock Inc., the world’s largest asset manager, said on Wednesday that it had lowered its support for shareholder proposals related to environmental and social issues to 4.1 percent, the lowest on record, during the most recent annual meeting season.
The number of environmental and social proposals increased from 455 to 493 last year, but BlackRock said most of them were rejected for roughly the same reasons as the previous year.
The proportion of resolutions it supported in 2023 was 6.7%, a significant drop from the 47% of resolutions it supported in 2020-21, but the number of resolutions submitted to companies has risen sharply since then.
“In our assessment, the majority of these (proposals) were overreachable, lacked economic merit or called for outcomes unlikely to enhance long-term shareholder value,” the firm’s “2024 Global Voting Spotlight” report said.
“A significant proportion focus on business risks that companies already have processes in place to address, making those processes unnecessary.”
BlackRock’s handling of these and other governance-related issues, collectively known as ESG, has come under intense criticism in recent years from a group of Republican politicians, who have accused various companies of engaging in “woke capitalism.”
Against this backdrop, BlackRock said it would press boards about financial resilience ahead of the next shareholder meeting season, but said companies’ success would also depend on how they deal with issues such as the global transition to a low-carbon economy.
Sustainability Risk
Lindsay Stewart, director of investment management research at industry research firm Morningstar Sustainalytics, said that while the drop in support may seem “modest,” “companies supported 10 fewer environmental and social proposals this year than last year, despite the increase in the number of resolutions.”
The figure is also being driven down by an increasing number of resolutions aimed at forcing companies to roll back their sustainability risk management plans, including realigning their operations to align with global climate goals.
BlackRock said it did not support any of the 88 proposals that fell into this category.
This year we supported a total of 20 proposals.
Four of the cases were related to climate and natural capital and concerned disclosures by Berkshire Hathaway, Denny’s, Jack in the Box and Wingstop.
More broadly, BlackRock’s support for shareholder proposals increased to 11% (99 of 867) from 9% (71 of 811) a year ago due to the company’s increased support for governance-related resolutions.
“The proposals we supported aimed to strengthen minority shareholder rights, for example by introducing simple majority voting. Market support for governance proposals has also increased compared to last year,” the company said.
