BlackRock uses shareholder meeting to insist it follows version of ‘corporate purpose’ framework, push environmental priorities
BlackRock annual meeting reveals ‘cognitive dissonance’ on stakeholder capitalism implementation, argues As You Sow
BlackRock Inc., the world’s largest asset manager with nearly $7 trillion under its control, was pushed by shareholders Thursday to better defend its stance in support of mindfully investing to slow climate change.
Pressed on climate topics, CEO Larry Fink and others defended the company’s approach to proxy voting, on which it has pledged to take a harder line. Company officials renewed attention on BlackRock’s support for corporate climate-impact reporting.
Shareholders also pressed the asset manager
for a plan on how it is planning to implement the Business Roundtable’s “New Statement on the Purpose of a Corporation.” The preliminary vote on this topic earned 3.85% in favor, which exceeds the threshold needed to bring this new resolution forward in 2021.
Advocacy groups pressed the fund giant to turn words into stronger actions.
In his presentation of the proposal, Andrew Behar, CEO of the non-profit organization As You Sow, which promotes investor action on sustainable practices at corporations, said: “We agree with the World Economic Forum, the Business Roundtable and BlackRock on the path forward. This requires an alignment of words and actions. Yet historically, BlackRock has voted for nearly every egregious CEO pay package and against nearly every climate resolution. This cognitive dissonance is troubling.”
Fink also said the company must represent the views of a wide range of clients.
“We’re trying to make sure that we are representing the ideas, the needs of our clients. Of our clients who happen to be in one particularly-leaning part of the country, versus, a client in another particularly-leaning part of the country,” Fink said.
As You Sow said Fink, on the call, seemed to endorse the proposal by saying, “A company’s ability to achieve its full potential and deliver to all stakeholders — its employees, its clients, its shareholders, and other communities — is imperative, you cannot have long-term profitability without that…and we believe that BlackRock already operates in accordance with the principles and commitments consistent with the Business Roundtable’s New Purpose.”
However, Fink gave no implementation details appearing to believe that the New Purpose was already implemented, disregarding the many contradictions between words and actions highlighted in the proposal, Behar said.
A conservative advocacy group promoting free enterprise also took issue with Fink’s stand during the shareholder meeting.
“BlackRock CEO Larry Fink consistently brags about his commitment to pushing environmental, social, and governance (ESG) causes as part of a new ‘stakeholder’ capitalism. Yet when I asked him about the two-faced nature of these hollow boasts against the backdrop of BlackRock’s promotion of Chinese investments that lack any ESG stewardship, he couldn’t answer the question,” said Justin Danhof, general counsel at the National Center for Public Policy Research and director of its Free Enterprise Project.
BlackRock earlier this year outlined tougher policies for the influential proxy votes it casts at springtime annual meetings, including a focus on having companies report more details about topics like their emissions and water pollution.
BlackRock also said in recent days that it had been told by some companies that certain non-financial projects like sustainability reports had been “de-prioritized” due to the economic shutdown from COVID-19.
“We recognize that in the near-term companies may need to reallocate resources to address immediate priorities in these uncertain times,” BlackRock’s report stated. BlackRock said it would “expect a return to companies focusing on material sustainability management and reporting in due course.”
Also at the Thursday meeting, BlackRock said all of its 16 director nominees received strong investor support at its annual meeting on Thursday, at which Chief Executive Laurence Fink defended the size of the company’s large board.
The company said each nominee received about 94% support from investors. That same proportion voted in favor of the company’s executive pay at the meeting, held via teleconference, the company said.
BlackRock’s board is bigger than those of rival financial firms like State Street Corp. and JPMorgan Chase & Co
, each with 11 members.