"Our world is on fire"
I know.
A $7 trillion climate change warning to the stock market from its biggest shareholder
Published Sun, Dec 13 202010:30 AM ESTUpdated Sun, Dec 13 20207:59 PM EST
Eric Rosenbaum
Key Points
BlackRock, which has significant influence on proxy battles against corporations, signalled this week it would support more shareholder resolutions on issues including climate change.The world’s biggest investor has been criticized in the past for not following the words of its CEO Larry Fink, who has said climate will “fundamentally reshape finance,” with enough action.In the past week, Exxon Mobil was targeted by activist investors and a $200 billion New York pension fund threatened to divest from fossil fuel companies.The evidence of climate change — from global temperature records to Arctic ice melt, wildfires, hurricanes and flooding — is accelerating. So is investment pressure on corporations.
In the past week, Exxon Mobil was targeted by activist investors, as well as CalSTRS, one of the nation’s largest pension funds. New York State’s $226 billion pension fund announced a plan to potentially divest from oil and gas stocks in the years ahead. The world’s largest money manager, BlackRock, issued an update to its approach to engaging with corporations, indicating it will be more inclined to vote in favor of shareholder resolutions, and against boards of directors at companies.
While that BlackRock strategy change — outlined in a new investment stewardship document published Wednesday night — may seem to be the mundane one among recent climate actions in the market, impact investing experts say that ahead of the 2021 annual shareholder meeting season, the $7 trillion fund manager’s plans represent an important change.
“We’ve been talking about this for 20 years and some of the changes we saw this week were unlike anything we’ve seen before,” said Mindy Lubber, CEO and president of Ceres, a sustainability nonprofit that works with investors on climate change. Ceres announced this week a consortium of investors managing $9 trillion in assets that have committed to investing along net zero carbon goals.
While it is not part of the new net zero investor coalition, with $7 trillion in assets on its own, BlackRock’s decisions influence other investors and corporations.
“BlackRock owns every company in the market,” Lubber said.
A BlackRock spokesman downplayed the significance of its new report in a call with CNBC earlier this week, but impact investing experts, who have been critical of the company in recent years for a weak voting record on shareholder resolutions, say it is significant and should lead to more action that mirrors the strong words of CEO Larry Fink on climate.
Shareholder votes work
According to new data included in the report, BlackRock already changed its approach to voting shareholder proposals. Since July 2020, it supported eight out of nine environmental proposals brought by shareholders.
“That level of support, if it continues, is a distinct break with their historical record,” said Jackie Cook, director of sustainable stewardship research at Morningstar, who has tracked shareholder climate proposals for years.
When it comes to support for shareholder resolutions on climate, BlackRock and Vanguard, the two largest fund companies, have finished near the bottom of the group of top 50 asset managers in recent years and that has led climate investing experts to lose faith in them as investment stewards focused o
continues at cnbc.com |
