Dive Brief:
- BlackRock supported 4% of environmental and social shareholder proposals in the 2024 proxy season, according to its latest Investment Stewardship report, down from around 7% in 2023 and 21% in 2022.
- The asset manager’s overall approval rate for shareholder proposals rose slightly to 11% this year, up from 9% in 2023, bolstered by increased support for governance proposals — a trend that was reflected more broadly across this proxy season.
- BlackRock said in the report it found a majority of the proposals “overreaching, lacking economic merit” or seeking objectives “unlikely to promote long-term shareholder value.” However, Morningstar Sustainalytics noted in emailed commentary to ESG Dive that given the overall increase in such proposals this proxy season, the asset manager ultimately supported 10 fewer environmental and social proposals than it did last year.
Dive Insight:
BlackRock, the nation’s largest asset manager, said its decline for environmental and social proposals followed broader market trends, reporting its median support for such proposals to be 13%. Prior analyses of the proxy season from Sustainalytics — a subsidiary of Morningstar focused on ESG research, ratings and analytics — and Diligent Market Intelligence found an average support for environmental and social proposals of 16%, down from 19% in 2023 and nearly half of a 2021 high of 33% support.
BlackRock attributed its own decline in support for environmental and social proposals to a confluence of factors, including a rising percentage of proposals it found too prescriptive, and the firm said a “significant percentage were focused on business risks that companies already had processes in place to address, making them redundant.”
The firm additionally noted an increase in proposals looking to roll back companies’ efforts on material sustainability-related risks. This corresponds with Morningstar’s recent finding that anti-ESG proposals fueled the rise in ESG proposals this proxy season. BlackRock identified 88 anti-ESG proposals and said it did not support any of them, which also contributed to its decreased support for environmental and social proposals.
BlackRock reported an increase in support for governance related proposals that also corresponds with broader market trends. The firm reported supporting 79 governance proposals in the latest proxy season, compared to 41 in the 2023 proxy season. The firm said it supported proposals that were related to enhancing shareholder rights, like proposals to adopt simple majority votes.
“[BlackRock] looks to boards to establish governance structures aligned with shareholders’ long-term financial interests and may not support management where this does not appear to be the case,” the report said.
“These shifts could have profound implications for corporate governance and the prioritization of ESG issues,” Lindsey Stewart, Morningstar Sustainalytics director of investment stewardship, said in emailed comments Wednesday. “A deeper understanding of these trends is crucial for stakeholders across the board, from investors to corporate leaders.”
Stewart said BlackRock’s decline in support for environmental and social proposals helps explain a decline in key resolutions, or proposals that receive more than 40% but less than 50% support.
Stewart noted in separate commentary last week that key resolutions fell from 38 in 2023 to 24 this year, while “near-miss” proposals — proposals with sub-40% but above 30% support — slightly increased to 70 from 64 in 2023.
The release of BlackRock’s proxy voting decisions prompts attention to turn to the rest of the “Big Three” investment advisers, Vanguard and State Street, to complete the picture of this proxy season, according to Stewart.
Vanguard supported just 2% of environmental and social proposals in 2023. Although the firm’s partial year data suggests a continued fall in support, the nation’s second-largest asset manager is starting from an “already low base,” so “further reductions in support by Vanguard will have a lesser effect on the average,” Stewart said.
State Street, then, becomes the final puzzle piece. Prior Morningstar research has found the nation’s third-largest asset manager to typically be the most-supportive of environmental and social proposals, and but Stewart said his firm’s data also showed a decline in support from State Street on such proposals through the first nine months of proxy season.
“If State Street had also reduced their support for E&S resolutions this year, it would go a long way to explaining the continuing drop in the number of key resolutions,” Stewart said.
Overall, BlackRock voted with the suggestions of a company’s management on 88% of proposals between July 1, 2023 and June 30, 2024, a percentage that stayed even from the prior proxy season.
