BlackRock, Vanguard fall short on climate voting, report says

Vanguard plans to expand its application of blockchain in early 2018.
Register now

For all the talk on tackling climate change, BlackRock and Vanguard aren’t doing much to assist global investor efforts on the topic, according to nonprofit group Majority Action.

The two fund giants voted for 99% of U.S. directors proposed by the energy, utility, banking and automotive companies reviewed by Majority Action and voted overwhelmingly against resolutions that it deemed “climate-critical.”

“They are putting in a tremendous effort except on where the things that matters most, and that’s telling boards that they need to get on the net-zero program,” Eli Kasargod-Staub, executive director of Majority Action, said in a telephone interview. The group reviewed how the world’s 12 biggest asset managers hold large U.S. companies accountable to combat climate change.

As the largest holders in many public companies, BlackRock and Vanguard are under pressure to show how they’re using their resources to push for a greener and more equitable world. While BlackRock has committed to putting climate at the center of its strategy and Vanguard has said it’s a key issue, critics say there’s a disconnect between their words and actions.

The industry’s largest money manager experienced record inflows to sustainable products in the first six months of the year.
September 17
2 Min Read
Fidelity's letter to the Labor Department says the proposal isn't “well grounded or supported by much of the emerging data.”
August 31
3 Min Read
A typical investment for Nuveen's $5.8 billion impact investing unit these days ranges from $20 million to $60 million, says its co-head.
July 27
5 Min Read

Vanguard spokeswoman Alyssa Thornton said the firm “cares deeply about the impact of climate change on our investors’ long-term value and we continue to engage with company leaders and boards on this important issue.” She added in an emailed statement that “proxy voting, while important, doesn’t reflect the full extent of our actions with companies on the material risks associated with climate change and other environmental or social issues.”

A BlackRock spokesman said the firm’s investment stewardship team “focuses on advocating for the corporate governance and business practices that add to the value of our clients’ investments — that means both engagement and voting. Our engagement stats are up meaningfully across E, S and G.”

In addition, the spokesman said, “not all shareholder proposals are created equal, and it would be wrong to equate good governance with voting against management without regard for a proposal’s impact. Blindly supporting proposals is not a responsible approach to stewardship.”

BlackRock supported three of 36 climate-critical resolutions in the period ended June 30, while Vanguard backed four. Their votes would have ensured majority support for at least 15 of these proposals, including one to hold the board of JPMorgan Chase accountable for its role as the world’s largest fossil fuel financier, the Majority Action report said.

BlackRock, based in New York with $7.3 trillion in assets, said last week that it voted against the re-election of board directors at 53 companies, including Exxon Mobil, Volvo and Daimler, because they failed to make progress on addressing climate change.

Funds that blow away ESG misconceptions
The decade’s top performers also outpaced broader markets over the short term.

In its stewardship report, BlackRock said it “took voting action against those companies where we found corporate leadership unresponsive to investors’ concerns about climate risk or assessed their disclosures to be insufficient given the importance to investors of detailed information on climate risk and the transition to a low-carbon economy.”

Some other asset managers voted more assertively to urge companies to take action on climate issues, Majority Action said. Legal & General Investment Management and Pimco voted against the most director candidates proposed by company management and supported all of the shareholder proposals reviewed by Majority Action.

Bloomberg News
ESG Vanguard BlackRock Asset managers Money Management Executive