BlackRock Inc. has continued to scale back its support for shareholder proposals on environmental and social issues for the third consecutive year. The firm argues that many of these proposals are unsubstantiated and detrimental to long-term financial interests, with minimal impact on improving companies.
According to a report released by BlackRock on Wednesday, the asset manager endorsed only 4% of the 493 environmental and social proposals over the past year, down from 7% the previous year and more than 20% in the same period up to mid-2022.
The world’s largest asset manager, which stated in January that its stewardship efforts are centered on corporate financial health, increased its backing for corporate governance resolutions — the “G” in ESG. BlackRock supported 21% of these proposals during the period, up from 11% a year earlier, the report claims.
The firm noted that shareholder proposals often face significant resistance because they are of “poor quality or irrelevant to a company’s ability to deliver long-term shareholder value.” BlackRock also mentioned that many proposals come from advocacy groups targeting US companies indiscriminately.
Joud Abdel Majeid, BlackRock’s global head of investment stewardship, wrote in the report, “Investors found the majority of these proposals to be overly prescriptive, lacking economic merit, or asking companies to address material risks they are already managing.”
With $10.6 trillion in assets under management as of mid-year, BlackRock is a leading shareholder in most S&P 500 companies and has faced intense scrutiny from US investors and politicians regarding its voting and engagement on ESG issues. The firm supported management on approximately 88% of global proposals.
Overall, the trend of reduced support for environmental and social resolutions has been observed across the industry, with average backing dropping to 16% in the latest proxy year from 19% in the previous year, according to Morningstar Inc.