BlackRock Shows Resolve and Restraint in Public Climate Test

The $6.5 trillion firm said in a report on Tuesday it identified 244 companies during the 2020 annual proxy season that weren’t doing enough to either prepare their businesses for a warming planet or inform their investors about the possible risks to their operations from climate change. BlackRock voted against directors at 53 of the companies, or 22%, and said it will vote against directors at the remaining 191 next year if they fail to make significant progress over the coming 12 months.

BlackRock’s voting record at shareholder meetings provides the clearest indication yet on how it’s delivering on its January promise to put climate change concerns at the center of its strategy. While it isn’t a complete picture of how the New York-based firm is advancing sustainability and taking companies to task on environmental issues, the report offers some valuable insights into its willingness and capacity to challenge companies and push them to do better.

BlackRock rejected the election of directors at companies, including Exxon Mobil Corp. and Volvo AB, for making “insufficient progress” on climate disclosures. It also voted against a number of more specific climate proposals, which asked companies for anything from extra reporting on corporate emissions to details of their lobbying activities, at companies including Royal Dutch Shell Plc and Total SA.

“The quality of BlackRock’s voting disclosures has improved and is now amongst the best in the market, but Blackrock’s actual voting decisions continue, overall, to disappoint,” said Catherine Howarth, chief executive of responsible investment campaign group ShareAction. “Blackrock is prepared to vote in support of shareholder proposals demanding better corporate climate disclosures, but consistently fails to back proposals demanding real action from high-carbon companies to limit the risks of dangerous climate change. 2020 needed to be the year when the investment and the corporate sectors moved beyond disclosure.”

Larry Fink, BlackRock’s chief executive officer, said in a letter to American corporate executives in January that climate change will upend global finance sooner than they might think and will become “a defining factor in companies’ long-term prospects.”

As such, Fink said the asset manager would make sustainability integral to its business from portfolio construction to new investment products that screen fossil fuels. He also said the firm would strengthen its commitment to transparency in its investment stewardship activities, including shareholder votes.