BlackRock, the world’s largest fund manager, has refused to support any anti-ESG shareholder proposals lodged during the US proxy season, a report reveals.

According to the report issued this week, BlackRock declined to back 88 shareholder resolutions that sought to “roll back company efforts to address material sustainability-related risks”. All 88 were in the US, a rise on last year’s 57 anti-ESG demands.

The decision, the firm says, helps explain why BlackRock’s support for ESG-related proposals at AGMs over the current proxy season has dropped to a record low of 4%, or 20 out of a total of 493. In the previous year, the figure stood at 6.7%, or 30 out of 455. During the 2020-21 season, when ESG resolutions were relatively focused and anti-sustainability proposals scarce, BlackRock backed 47% of proposals.

Anti-ESG proposals have become a feature of the US proxy season as the country races towards a presidential election in which opinion on sustainability policies is highly polarised. Republicans tend to view ESG negatively, while Democrats offer strong support for sustainability measures.

In all, BlackRock opposed more than 60% of ESG-related proposals because the investor considered they were already covered by existing company policies. This suggests that corporates have increasingly moved to tackle sustainability issues in many areas.

In nearly a third (31%) of cases, BlackRock considered shareholder resolutions to be too prescriptive, while it viewed a further 8% as “lacking economic merit”.

‘Poor-quality’ proposals

In its report, BlackRock said it “observed many poor-quality” proposals, particularly those relating to ESG.

“Consistent with last year, we found the majority of proposals addressing these topics were overreaching, lacked economic merit, or sought outcomes that were unlikely to promote long-term shareholder value,” the report said.

BlackRock offered the example of an anti-ESG proposal it declined to support at The Coca-Cola Company. During its AGM, the drinks maker was faced with a call to report on the “risks created by the company’s diversity, equity and inclusion efforts”. The proposal received less than 2% support.

Proposals focused on governance were, however, supported by BlackRock. Of the 374 resolutions – mostly focused on shareholder rights, governance structures or executive pay – the fund manager supported 21%.

BlackRock leadership has previously expressed concerns about the politics of environmental and social issues in governance. Last year, chief executive Larry Fink said that the term “ESG” had been “weaponised” and that it would no longer appear in corporate documents.

‘Client cartel’

Last month, Jim Jordan, Republican chair of the House of Representatives judiciary committee, sent letters to 130 investment managers asking them to explain their ESG policies. The letter claims to have evidence of a “climate cartel” made up of “major financial institutions and left-wing activists” that “collude to impose radical environment, social and governance (ESG) goals on American companies”. The letter alleges that members of Climate Action 100+, an initiative for investment firms concerned by the climate crisis, may have breached anti-trust law.

Several big-name investors have withdrawn from Climate Action 100+ in recent months, while BlackRock has shifted membership from its US entity to Blackrock International.

Climate Action 100+ has rebutted claims of anti-trust violations. It has said that recent political discourse and the letter have “misunderstood and misrepresented elements of Climate Action 100+—this includes the basics of what it is and its core activities.”

Many will read BlackRock’s latest report as a further move away from ESG. It is true the term does not appear. But the fund manager’s opposition to anti-ESG resolutions suggests it is some way from giving up on sustainability policies, despite the political climate.