Climate Advocates Challenge BlackRock’s Fink

    Campaigners wrote an open letter to the CEO arguing BlackRock should take a clearer position on climate change more forcefully than it may be comfortable with.

    Stockholm (NordSIP) – On January 11, twelve firms advocating climate-friendly investments, including Climate Action, Boston Common Asset Management, Trillium Asset Management co-signed a letter calling on BlackRock CEO Larry Fink to use the company’s voting shares more actively to help fulfil the Paris environmental goals at a faster pace. The letter comes ahead of Fink’s own annual letter to the CEOs of the businesses that BlackRock is invested in.

    This letter comes in the heels of the new model of shareholder investment Fink suggested in last year’s annual letter, where he called upon investors and managers to participate in an ongoing “year-round conversation about improving long-term value”. In the same document, the CEO argued that a “company’s strategy must articulate a path to achieve financial performance” and “understand the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth.”

    This year, these twelve firms are taking the world’s largest asset management firm to task in an open letter challenging Fink to use the votes granted by the shares held by his company to demand portfolio companies take six concrete steps towards furthering ESG priorities.

    The first of these is to “align business strategy with the Paris Goals”, calling on BlackRock to vote against relevant company directors that refuse to do so. Secondly, they recommend do demand that carbon intensive companies reduce their carbon emissions in line with the Paris Goals. Thirdly, BlackRock should request “that companies review and/or withdraw membership of trade associations where positions taken conflict with those of the company and from trade associations which work to undermine the Paris Goals”. Fourthly, the firm should vote against the appointment of directors and the auditors “where such climate fluency and testing of management have not been demonstrated”.

    The campaigners also suggest that BlackRock link remuneration with climate risk mitigation and call on it to increase transparency by disclosing its voting intentions in advance of company shareholder meetings. The campaigners conclude by calling on BlackRock to vote in support of proposals advanced by the Climate Action 100+ initiative, currently supported by 310 investors.

    These demands, if fulfilled, would represent a break from BlackRock’s established practices and so seem somewhat unlikely to be taken in whole, if even in part. On the one hand, data from the 50/50 Climate Project shows that BlackRock only supported 9% of key climate proposals, making it the least supportive asset manager of the top 24 asset managers considered by 50/50 Climate. On the other hand, the call to actively vote against directors and auditors is in stark opposition to BlackRock traditional a hands-off approach of “engagement-first”, whereby voting against the existing board is seen as an escalation of an otherwise unsuccessful dialogue with investment companies.

    Picture from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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