The three biggest U.S. asset managers reportedly scaled back shareholder support for so-called ESG proposals during the last voting period following Republican backlash over their controversial investment policies.
BlackRock, State Street and Vanguard, which hold roughly 20% of all companies in the S&P 500, have backed fewer environmental, social and governance resolutions compared to last year that focus on topics such as climate change, workforce diversity and human rights. Bloomberg reported.
BlackRock is the world's largest asset management firm, with total assets under management of approximately $10.5 trillion. According to Statista The company said it voted in favor of 4% of environmental proposals in the 12 months to June, down from 7% a year earlier.
in 2024 Proxy Voting ReportBlackRock said most climate change proposals “overreach, lack economic merit or call for outcomes that are unlikely to drive long-term shareholder value.”
BlackRock CEO Larry Fink has long supported ESG targets but has recently begun to scale back his support amid an investigation by 19 conservative state attorneys general into the company's ESG-related policies that he says are harming the U.S. energy industry.
The investigation led to an investment boycott of BlackRock in Texas.
Fink said he was removing the term “ESG” from his vocabulary because it had become so polarizing.
State State's investment arm said it supported 6 percent of environment-related shareholder proposals and 7 percent of social-related shareholder proposals in the first half of this year, lower than the same period last year.
The Boston-based company $4.4 trillion under management – ESG proposals It has become increasingly “prescriptive” and “complex.”
Vanguard Group – It manages about $7 trillion. As of 2021, the company is not supporting any environmental resolutions, it announced last month.
The Malvern, Pennsylvania-based investment advisory firm echoed State Street's argument that the proposal was becoming too “prescriptive.”
“The proposals do not address the significant financial risks to shareholders of the companies at issue,” Vanguard said. United States Regional Overview Report.
State Street, Vanguard and BlackRock did not immediately respond to requests for comment.
The decline in support marks a sharp shift from 2021, when U.S. companies and asset managers launched a series of green initiatives.
The current political climate has clearly influenced asset managers' policy shifts, says Lindsay Stewart of Morningstar Sustainalytics. He told Bloomberg.
“But in reality, even some of the pro-ESG resolutions are poorly worded or lack clear benefits to shareholders, so it's no wonder companies have rejected many of these resolutions,” he said.
While Democrats have defended the need for ESG in the workplace, Republican politicians have attacked the initiative as a “woke” way for the Biden-Harris administration to force the corporate world to implement politically liberal policies.
Overall shareholder support for environmental and social resolutions fell to 19% at the most recent annual meeting from about 22% at the same time last year, according to Morningstar.
The decline in shareholder support coincides with a similar shift among business leaders, with CEOs pushing sustainability lower on their list of priorities. According to a survey by Bain & Company:.
Concerns about inflation, artificial intelligence and geopolitics currently top the list, Bain said.
The resolution's reversal comes as Republicans pressure the finance industry and large corporations to back off environmental and DEI goals.
Conservative activist Robbie Starbuck in particular has led the calls to repeal DEI.
The 35-year-old ran unsuccessfully for U.S. House of Representatives in Tennessee in 2022.
With the support of over 620,000 followers on X, Starbucks has threatened to boycott companies like Tractor Supply, Harley Davidson, and Ford, forcing them into abandoning their DEI initiatives.
Now the financial industry is facing similar pressure to reverse its climate and social goals. State pensions in Texas and Florida have already pulled their money from BlackRock.
Stewart told Bloomberg that the top three asset managers’ voting records contrast with their European rivals, who remain focused on sustainability targets.
