In its latest stewardship piece, BlackRock attributes an increase in overly prescriptive climate-related shareholder proposals this proxy season to the SEC’s November 2021 policy shift reflected by Staff Legal Bulletin No. 14L, which rescinded the longstanding company-specific approach to Rule 14a-8’s “ordinary business” exclusion and replaced it with a “broad societal impact” approach.
As a result of the policy change, BlackRock has observed that “many of the proposals coming to a vote are more prescriptive and constraining on management than those on which we voted in the past year,” which – consistent with BlackRock’s stated approach to shareholder proposals generally, as well as factors and circumstances it deems currently relevant to climate and energy specifically - are much less likely to generate BlackRock’s support based on its view that such proposals are not consistent with its clients’ long-term financial interests.
The bulletin identified these shareholder proposal themes in particular as among those that may fail to garner its support due to their overly prescriptive or constraining nature:
- Ceasing providing finance to traditional energy companies
- Decommissioning the assets of traditional energy companies
- Requiring alignment of bank and energy company business models solely to a specific 1.5⁰C scenario
- Changing articles of association or corporate charters to mandate climate risk reporting or voting
- Setting absolute scope 3 GHG emissions reduction targets
- Directing climate lobbying activities, policy positions or political spending
More generally, with reference to its Global Principles and its Investment Stewardship piece: “Climate Risk and the Transition to a Low-Carbon Economy,” BlackRock reiterated its climate disclosure expectations and the fact that it encourages, but does not expect, Scope 3 emissions disclosure at this point “given the methodological complexity, regulatory uncertainty, concerns about double-counting, and lack of direct control by companies.”
See “BlackRock won't back climate shareholder proposals it considers too prescriptive” (Pensions & Investments), “BlackRock to back fewer shareholder resolutions in this AGM season” (Reuters), “BlackRock to Back Fewer Climate Proposals this Year as Quality of Resolutions Declines” (ESG Today), and additional resources on our Institutional Investors page »BlackRock.
This post first appeared in the weekly Society Alert!