BlackRock's newly released “Investment Stewardship Annual Report,” which captures its proxy voting-focused stewardship activities for the 12 months ended December 31, 2022, reveals a plethora of noteworthy statistics, engagement examples, and instructive commentary that should help inform companies' engagement and disclosure going forward.
Key takeaways include:
- Globally, BlackRock supported about 14% of governance-related shareholder proposals (69 of 468) and 20% of environmental and social shareholder proposals (64 of 325, compared to 45% of E&S proposals in 2021). Approximately 78% of the E&S shareholder proposals voted were in the US.
- More specifically, it supported about 24% of 119 environmental shareholder proposals; 18% of 110 climate-related shareholder proposals; and 17% of 206 social-related shareholder proposals, globally. All of the social-related shareholder proposals BlackRock supported were in the US.
- In the Americas region, BlackRock supported: (i) 92.5% of directors (compared to about 90% globally); 15% of governance shareholder proposals; (iii) 18% of social shareholder proposals; and (iv) 29% of environmental shareholder proposals.
- The primary reasons BlackRock did not support certain directors in 2022 were a lack of director independence, lack of board diversity, lack of P4P alignment, and director overcommitment.
Notably, BlackRock attributes the sharp decline in overall shareholder support for E&S shareholder proposals in the US, coupled with a spike in the number of such proposals, to the SEC’s SLB 14L, which has increased the prescriptive nature and reduced the overall quality of proposals voted:
However, in 2022, we observed another shift, evident in a marked increase in environmental and social-related shareholder proposals that went to a vote and the return to more prescriptive and “single issue” proposals. The number of proposals that went to a vote in the U.S. increased year over year by 23% to 575.1In May 2022, BIS noted how these changes in the U.S. were enabled by an update to U.S. SEC guidance, which broadened the scope of permissible proposals that address “significant social policy issues.” As a result, BIS observed many more proposals in the U.S. (where the majority of shareholder proposals are filed on a global basis) that were unduly constraining on management, sought to micromanage a company’s strategy or were overly prescriptive as to information sought or timeframes within which management needed to respond. In our view, others failed to recognize the progress already made by companies such that they had largely met the ask of the proposal, particularly relating to the management of climate-related risks and opportunities. This meant that, even where we agreed with the issue in focus, we did not consider it appropriate to support the proposal given our view that the outcome, if it passed, would not align with the financial interests of BlackRock’s clients as long-term investors.
BlackRock commented last year on the adverse impact of SLB 14L as well, which we reported on here.
The report also includes numerous engagement and other statistics by topic and by region, a list of BlackRock’s vote bulletins issued for 2022 meetings (with links to the source), and more.