BlackRock and Vanguard have suspended corporate meetings following new guidance from the U.S. Securities and Exchange Commission (SEC) that restricts investor involvement in ESG activism.
The world’s two largest asset managers are reviewing the SEC directive, issued last week, over concerns it could expose them to legal action under the Trump administration. The guidance bars investors from pressuring companies on issues such as climate policies, executive pay, and governance structures, warning that such actions could amount to exerting control.
Under the new rules, discussions on voting decisions remain permitted, but any attempt to influence management on ESG matters could necessitate a shift from passive investor status (Schedule 13G) to activist investor classification (Schedule 13D).
The policy forms part of the Trump administration’s broader rollback of Biden-era ESG initiatives. The move coincides with the pending Senate confirmation of Paul Atkins, a cryptocurrency advocate and Trump’s nominee for SEC chairman.
Both BlackRock and Vanguard have put their engagement meetings on hold indefinitely. BlackRock’s decision was first reported by Semafor, while Reuters revealed Vanguard’s stance. It remains unclear whether State Street, another major US asset manager, has taken similar action.
The crackdown comes amid Republican efforts to curb ESG investing. BlackRock and Vanguard have faced lawsuits from GOP-led states accusing them of using shareholder influence to advance climate policies. Last month, BlackRock settled a dispute with Tennessee, agreeing to improve transparency around its ESG investment strategies and prioritise financial returns in shareholder votes.
The SEC’s intervention has been welcomed by ESG critics. Will Hild, executive director of Consumers’ Research, accused BlackRock of using engagement meetings as a “mafia-style shakedown” to push “far-left politics.” He hailed the new rules as a step towards restoring “law and order” in asset management.
BlackRock and Vanguard have yet to comment publicly on the future of their ESG engagement strategies.
