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Categorized | Financial

BlackRock’s environmental voting record attacked

Posted on November 27, 2016

BlackRock has clashed with its shareholders after repeatedly voting against environmental motions at the companies it invests in, despite the world’s largest asset manager warning about the investment risks posed by climate change.

A group of BlackRock shareholders, including an asset manager, a public pension fund and two religious investors, have accused the company of putting its reputation at risk because of its “perplexing and troubling” votes on environmental and social issues.

The shareholders, which also include Walden Asset Management, a socially responsible investment company managing $2.7bn, and the Center for Community Change, a non-profit organisation, have filed a motion calling on BlackRock’s board to carry out a full review into the fund house’s voting practices at annual general meetings.

Timothy Smith, director of environmental, social and governance shareholder engagement at Walden, said: “We believe their stance of voting ‘no’ on virtually all social and environmental resolutions is contrary to their fiduciary duty and certainly sends the wrong message to companies receiving resolutions requesting reasonable actions on climate change.”

The public criticism of BlackRock’s record on environmental and social issues is something of an embarrassment for the fund house.

The New York-listed company has issued repeated high-profile warnings that climate change will hurt investment returns.

In the motion calling for the review of voting practices at BlackRock, the shareholders wrote: “BlackRock’s publicly reported proxy voting record reveals consistent votes against virtually all climate-related resolutions … even when independent experts advance a strong business and economic case for support.”

FTfm reported earlier this year that BlackRock voted against an investor-led climate change resolution at the annual meetings of ExxonMobil and Chevron, the oil companies, in May. Mr Smith says the fund giant, which manages $5.1tn in assets, also voted against similar resolutions at oil companies including Occidental and Conoco.

The shareholders said: “BlackRock’s voting practices, which appear inconsistent with company statements to companies and internal policies addressing climate change, pose reputational risk for the company.”

In the motion, the shareholders also warned that the company could be putting capital at risk by failing to “recognise significant company-specific and economy-wide risks associated with the negative impacts of climate change”.

A spokesperson for BlackRock said the investment manager prefers to engage directly with management and directors to understand their strategies for dealing with issues such as climate change.

“Rather than trying to enhance reporting company by company, we believe that a more effective approach for improving climate risk disclosures is shaping market-level standards,” the spokesperson added.

Walden and fellow shareholders have also filed similar motions with T Rowe Price, the US asset manager, and JPMorgan, the US bank, BNY Mellon and Franklin Resources over their voting records on environmental and social issues.

They argue asset managers, including AllianceBernstein, Morgan Stanley and Wells Fargo, have been more supportive of climate change resolutions.