US asset management giant BlackRock is overhauling its voting policies for funds with climate objectives, in a bid to tackle conflicting decarbonisation agendas in the US and Europe.
Going forward, BlackRock funds with a climate and decarbonisation focus will pursue a different stewardship approach to the managers’ wider product offering pursuing a stronger emphasis on Paris alignment. This could mean climate focused funds taking a potentially more activist stewardship stance at AGMs such as voting against directors who failed to align their business to the energy transition.
The new guidelines are set to apply to 83 Europe-domiciled funds representing approximately $150bn as Joud Abdel Majeid, global head of Investment Stewardship at the $9trn manager explained in a letter to clients seen by Net Zero Investor. They will enter into force in Q4 2024, subject to board approval.
For the remainder of the firm’s portfolio “BlackRock will continue to undertake our stewardship responsibilities with a sole focus on advancing clients’ long-term financial returns in line with our benchmark policies” Majeid explained to clients.
This would still include consideration of climate-related risks and opportunities in a company’s business model, where material to the company’s ability to deliver long-term financial returns, the manager said in its guidelines.
BlackRock has historically taken a relatively conservative stance on climate change, having supported just 20 climate resolutions during the 2023 proxy season, according to research by ShareAction. This marks a significant drop compared to previous years.
However, BlackRock’s reduced backing for climate resolutions comes amid a surge of resolutions being filed, with more than 50 climate resolutions being filed in 2023 alone, according to Morningstar.
Amid growing political backlash and concerns over legal threats in the US, the manager has limited its membership status of CA100+.
But the firm has also rolled out voting choice, allowing institutional and increasingly also retail investors to have a say in how their shares will be voted on.
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