Is BlackRock, the world’s biggest investor, finally getting serious about the climate crisis?

Critics say the fund manager’s climate rhetoric isn’t matched by its voting record but its recent involvement in a pair of investor rebellions gives cause for cautious optimism, writes James Moore

BlackRock took flak for voting against a pair of environmental resolutions aimed at Australian oil companies earlier in the year (Getty)

BlackRock CEO Larry Fink promised to put the climate emergency at the heart of the business of the world’s biggest fund manager at the beginning of the year. The results? Patchy at best. But maybe that’s changing.

Majority Action, a US nonprofit, singled out the company, along with rival Vanguard, in a bitingly critical report earlier this month. It found the pair had voted in favour of 99 per cent of company-proposed directors across the energy, utility, banking and automotive sectors reviewed in its report.

BlackRock, it said, voted for 100 per cent of company-proposed directors at the banking and auto companies included in its analysis, 99.7 per cent at utilities, and 98 per cent at oil and gas companies. On the specific subject of utilities, it found no difference in voting behaviour between companies that had made net zero pledges and those that had not.

“BlackRock and Vanguard, the world’s largest asset managers and largest shareholders of the vast majority of S&P 500 companies, continue to undermine global investor efforts to promote responsible climate action at these critical companies – even as they publicly tout their commitment to addressing the climate crisis,” it concluded.

The glossy, windy 2020 Sustainability Report BlackRock recently put out says that it cast 55 votes against management “on director-related items for insufficient progress on climate disclosures” with six votes against management on environmental-related shareholder proposals. That really isn’t anything to boast about.

There were a total of 1,260 “engagements" reported on the issue, 300 less than were instituted over “boardroom quality”. So, ditto.

Those numbers do rather suggest that Majority Action had a point when it accused BlackRock of not doing enough, and the same goes for the other critics who have argued that its climate crisis rhetoric doesn’t yet come close to matching the reality of the way it behaves.  

The firm has a way to go before it’s in the same league as some of the big UK and European asset managers, which have taken a notably more assertive stance when it comes to environmental issues. Studies have also shown they are much more inclined to back it up with their votes.  

Still, a couple of moves in the last week suggest that there might be  grounds for some optimism. Some very cautious optimism. 

The first, and most obvious, was BlackRock’s involvement in an investor rebellion at Proctor & Gamble, a lynchpin of the American corporate establishment and one of its biggest companies outside tech.

A motion critical of the way the consumer goods giant uses palm oil and forest pulp in its products was filed by Green Century Capital Management, a smallish eco-conscious investment firm.

P&G had urged shareholders not to back the call for it to assess and disclose the impact of its activities on forests, but two-thirds of them demurred, including BlackRock.

“Assess and disclose” is, of course, a lot weaker than “halt”. Nor did BlackRock’s 6.6 per cent stake swing the vote.

But when your second largest shareholder dissents in such a public way it still stings. Such defeats remain quite rare. Ditto the involvement of such an establishment name in them, and they make company directors very uncomfortable.

The second saw BlackRock backing a proposal from the Australasian Centre for Corporate Responsibility calling on AGL, Australia’s biggest energy company, to hasten the closure of its coal-fired plants. This saw the US-based fund manager adopting a different position to many of Australia’s domestic pension funds and investors.

It’s worth noting here that BlackRock had taken flak for voting against a pair of environmental resolutions aimed at Australian oil companies earlier in the year.

Now these two could be isolated incidents. They could even be seen as window dressing. Or they could be seen as a reaction to the mounting criticism that the company has been engaged in greenwashing.

Protestors targeting its London HQ made that accusation at the beginning of the month.

They, and organisations like Majority Action, aren’t going to pipe down until Fink’s words are backed by more actions like the pair I discussed. They were certainly a step in the right direction and they were described as “good news” by a friend of mine working in corporate governance.

But he also said BlackRock has a long way to go. And it does.