BlackRock’s proxy voting history and ETF push highlight conflicting attitudes to ESG

BlackRock came under fire earlier this month after a report from sustainable non-profit firm Ceres found the world’s largest asset manager voted in favour of climate-related shareholders proposals only 10% of the time last year.

Among the 48 large asset managers measured by Ceres, BlackRock came 43rd in voting for climate-related shareholder proposals, with Vanguard just ahead in 42nd, according to CNBC.

Mindy Lubber, CEO and president of Ceres, commented: “It is unfortunate that the biggest firms are at the bottom of the list. When they vote proxies, as they did on Exxon, the votes changed substantially and the conversations do get started, at least.”

Furthermore, Jackie Cook, director of sustainable stewardship research at Morningstar, studied the voting patters of BlackRock over the past three years and found the firm failed to vote in favour of any climate change proposal in 2016 while in 2017 it voted in favour of just 4%.

Meanwhile, in a Morningstar report released on 15 March, Cook said the firm’s socially responsible funds have also failed to vote in support of climate change resolutions. For example, the BlackRock Impact US Equity fund voted against three greenhouse-gas and climate change proposals in 2018.

The asset manager was also criticised last year for allegedly being the “largest owner of fossil fuel companies and single largest contributor to climate destruction” by an environmental campaign labelled ‘BlackRock’s Big Problem’.

The voting patterns come at a time when BlackRock is digging its heels into ESG, rolling out more socially responsible products globally.

Just today, the firm rolled-out a six-strong ESG ETF suite in partnership with index provider MSCI in Canada, with the total expense ratios (TERs) ranging between 0.18% and 0.35%.

Meanwhile, for European investors, iShares launched an ‘Enhanced’ ESG range earlier this month, once again in partnership with MSCI.

At the time, Carolyn Weinberg, global head of iShares product, at BlackRock, commented: “Our sustainable core ETF range is about setting a global catalyst for choice and transparency that allows investors to apply ESG considerations into the foundation of their portfolios.”

Lubber concluded: “We need to see progress ‚Äî material progress. Having 2,000 or 5,000 engagements that nobody knows what is happening does not reflect the urgency of the problem.

“Given the dialogue that Larry Fink has put out in the public domain, his lofty, thoughtful quarterly letters, one would expect to see more consistency in their voting of proxies. Larry has said these issues matter, but there is only one way for them to matter.”

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