BlackRock ditches green activism over Russia energy fears

BlackRock has warned it will vote against most shareholder green activism this year for being too extreme, in a significant u-turn by the world’s biggest money manager.

The company said it was concerned about proposals to stop financing fossil fuel companies, including forcing them to decommission assets and setting absolute targets for reducing emissions in their supply chains.

It comes as BlackRock said Russia’s invasion of Ukraine has impacted the transition to net-zero, adding that short-term investment in traditional energy sources is now required to boost security.

In a stewardship report, the asset manager said: “We do not consider [the proposals] to be consistent with our clients’ long-term financial interests. “

It added: “Many of the climate-related shareholder proposals coming to a vote in 2022 are more prescriptive or constraining on companies [than last year] and may not promote long-term shareholder value. “

Last week, Barclays also defied green activists with a pledge to invest in new oil and gas projects to help Europe wean itself off Russian fossil fuel.

Blackrock has ballooned to manage more than $ 10 trillion (£ 7.3 trillion) in assets, giving the company significant stakes and influence in many of the world’s largest corporations.

Its update represents a significant times face for the asset manager which has been at the forefront of Wall Street’s push to encourage companies to shun fossil fuels and transition to greener alternatives.

In January 2020, chief executive Larry Fink, said “climate risk is investment risk” as he positioned BlackRock as a leader in ethical, social and governance (ESG) investing.

He also warned that climate change posed the biggest ever risk to financial markets.

Fink said: “Climate change is different. Even if only a fraction of the projected impacts is realized, this is a much more structural, long-term crisis. Companies, investors, and governments must prepare for a significant reallocation of capital. “

The decision to distance itself from “prescriptive” climate change policies comes as institutional investors face criticism for allegedly pushing political agendas.

On Thursday, Vivek Ramaswamy, a US health and technology entrepreneur, launched an “anti-woke” investment fund that will urge companies to focus on making money rather than championing political causes.

Mr Ramaswamy said the new venture, Strive Asset Management, has already received a host of job applications from employees at BlackRock, Vanguard and State Street – what he dubbed an “ideological cartel”.

Influential proxy advisers such as ISS and Glass Lewis, who advise shareholders how to vote at annual meetings, have also been criticized for promoting a narrow, Left-wing agenda.

BlackRock’s report also stated that the asset manager will not support proposals that could lead to companies being “micromanaged”.

It said: “We are not likely to support those [shareholder proposals] that in our assessment, implicitly are intended to micromanage companies.

“This includes those that are unduly prescriptive and constraining on the decision-making of the board or management, call for changes to a company’s strategy or business model or address matters that are not material to how a company delivers long-term shareholder value.”

A BlackRock spokesman said: “BlackRock is interested in companies ‘strategies and plans for responding to the challenges – and capturing the opportunities – of the energy transition, because they will have a direct impact on our clients’ investment outcomes.

“Voting on both director re-election and well-crafted shareholder proposals can be helpful expressions of investor sentiment. We continue to see voting on shareholder proposals playing an important role in our stewardship efforts. “

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