Investment behemoth BlackRock is calling out 53 companies, including ExxonMobil, Volvo, and Daimler, for lagging in their response to climate change, in what campaigners are still calling “baby steps” on its promise to use its enormous financial clout to drive faster, deeper carbon cuts.
“In January, chief executive Larry Fink said BlackRock would get tough on companies that were too slow to take action on climate change,” and “announced it would put environmental strategy at the core of its investment strategy,” City A.M. reports. In its new investment stewardship report released yesterday, “the asset manager said it had placed 244 companies ‘on watch’ for insufficient progress on issues relating to climate change. Blackrock said it took voting action at the annual meetings of 53 companies, largely taking action through voting against the re-elections of directors.”
“Our approach on climate issues, in particular, is to focus our efforts on sectors and companies where climate change poses the greatest material risk to our clients’ investments,” the stewardship report states. That assessment is based on “a company’s ability to compete in a world that has transitioned to a low-carbon economy (transition risk), for example, or the way climate change could impact its physical assets or the areas where it operates (physical climate risk).”
The U.S. $6.5-trillion fund sees two pathways to the influence it says it seeks: engaging with companies to communicate its expectations, and voting its shares when their performance falls short.
“In order to maximize our impact on behalf of clients, our climate-related engagements are focused on companies in carbon-intensive sectors that, taken together, represent a significant proportion of market capitalization and CO2 emissions in their respective regions,” the report adds. “These companies face material financial risks in the transition to a low-carbon economy that we need to understand as long-term investors.”
But while BNN Bloomberg credits BlackRock with showing “resolve and restraint” in the stewardship report, campaigners aren’t nearly satisfied yet.
“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 ShareAction CEO Catherine Howarth. “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.”
“Despite Larry Fink’s pledge to radically reshape BlackRock’s business to address the climate crisis, this shareholder season BlackRock took only baby steps forward by voting the right way on a fraction of the climate tests on the table, and claiming that stronger action is on the way,” agreed U.S. Sierra Club Senior Campaign Representative Ben Cushing. “It failed to vote for climate action at nearly 80% of the companies it identified as not making sufficient progress. BlackRock still has a long way to go before it can credibly claim to be taking the necessary action to meet the scale and urgency of the climate crisis.”
“BlackRock faced two clear tests on JPMorgan Chase, the world’s top banker of fossil fuels, and it failed both,” added Jason Opeña Disterhoft, senior climate and energy campaigner at the Rainforest Action Network. “It voted to re-elect Lee Raymond, the chief architect of global climate denial, to the board. If BlackRock thinks Lee Raymond is climate-competent, then it must think that literally anyone is. And BlackRock voted against a common-sense carbon footprinting resolution that would have passed with its support.”
“While we acknowledge that BlackRock ‘took action’ by voting against directors at pure play coal companies like Peabody and Arch, it begs the question why BlackRock, on behalf of its clients, remains invested in such companies at all,” said Sunrise Project Senior Strategist Diana Best. “For pure play companies like Peabody, the problem isn’t solved by a change in the board, and the thermal coal sector remains in structural decline. Despite global recognition for its climate policies announced in January, BlackRock’s coal exclusion policy clearly falls flat.”