How BlackRock Can Vote Climate, Spring 2020
How BlackRock and other asset managers vote on climate this spring could lead the business world
This January, after months of mounting pressure from the global climate movement, BlackRock -the world's biggest asset manager which as of January managed over $7 trillion - announced new climate policies and claimed it is putting climate change and sustainability at the center of its business model.
The first real test of these big promises is the 2020 shareholder season. Every spring, at the end of the corporate financial year, companies hold annual general meetings where their shareholders vote on resolutions around how the company runs, what its priorities should be, and who leads the board.
BlackRock has promised to use its shareholder power to vote down the boards of companies that are not making fast enough progress on climate and to vote for initiatives that will advance climate friendly goals. This will be a huge deal if the giant asset manager actually follows through. BlackRock’s is so big that it owns substantial shares in pretty much every major company in the world, so how it votes during shareholder season has big implications for how companies do business.
Just two months after BlackRock made its new climate commitments the impacts of Covid-19 laid bare just how vulnerable our economy is. As we recover from this pandemic it is vital that we rebuild our economy in a way that slows down the climate crisis and prepares us for future shocks likely to come from the impacts of climate change. In March, BlackRock restated its commitment to use its shareholder power to vote for climate -- now it's up to us to make sure it follows through.
Behind BlackRock in size are Vanguard, and State Street. Collectively these ‘Big 3’ asset managers vote about 25% of shares at S&P 500 companies. Last year these three asset managers used that considerable voting power to back 99% of oil, gas, and electric power company directors across the S&P 500, despite their woefully inadequate action to combat climate change. But this January State Street followed BlackRock’s lead and also committed to voting out boards that aren’t doing enough on climate. If these two giants follow through on their commitments this could be a historic shareholder season for the climate.
The seriousness of BlackRock and State Street’s commitments to the climate will be put to the test on a range of key shareholder votes this season. While there are many important shareholder meetings to watch, votes at three key companies - Duke Energy, JPMorgan Chase, and ExxonMobil - will provide a clear litmus test for whether the world's largest asset managers will follow their climate-friendly rhetoric with climate action this season.
Duke Energy is the largest and highest carbon-emitting publicly traded electric utility in the U.S. and its Shareholder Meeting is scheduled for May 7, 2020. There are three critical climate votes at the Duke AGM that BlackRock, State Street, and Vanguard must support. The first is a resolution to establish an independent chair of the board, a critical governance reform to hold management accountable to climate commitments. The second and third resolutions demand Duke be more transparent with its political and lobbying expenditures. These same resolutions were up for a vote last year and would have received majority support, but BlackRock and Vanguard voted “No”.
At the JPMorgan Chase AGM on May 19th, four key votes will reveal if these asset managers are really taking action on climate. JPMorgan Chase is the largest fossil fuel financier in the world and how it acts on climate is of vital importance to cutting off the flw of money to fossil fuel projects around the world.
Voting down the re-election of Lee Raymond, former CEO of ExxonMobil and current JPMorgan Chase Lead Independent Director, to the board is vitally important to the fight to stop Chase's fossil fuel financing. (Find out more about Lee Raymond - the notorious architect of ExxonMobil's climate denial strategy - and how we're organizing to stop his re-election to the board.)
Asset managers and other shareholders will also vote on two resolutions calling on the company to report on whether and how it plans to align its portfolio activity with the goals of the Paris Agreement, and how the company is managing the risks of its most harmful fossil fuel financing. There is also a resolution to establish an independent chair of the board, a measure investors have proposed for multiple years since 2012. An independent chair would check some of CEO Jamie Dimon's power and could boost attempts to shift the business model away from fossil fuels.
Votes in the oil and gas sector will also be critical this season, nowhere more so than at ExxonMobil. When it comes to climate responsibility, ExxonMobil lags far behind even investor expectations. The ExxonMobil Shareholder Meeting is likely in mid-May. Key votes include opposing the reelection of all ExxonMobil’s directors, supporting an independent chair proposal which would introduce some accountability into ExxonMobil’s governance structure, and supporting a lobbying disclosure resolution. Both the independent chair proposal and lobbying disclosure resolution would have received majority support last year, had BlackRock and Vanguard voted for them.
Other Shareholder Meetings to Watch
These key votes are just some of the most important ones to watch this shareholder season. This week Majority Action will release their full list of key climate votes with resources and analysis for investors, reporters, and activists to help track the most critical shareholder season on record.
With BlackRock and other top asset managers finally acknowledging the systemic nature of the climate crisis and their responsibility to act, this shareholder season will reveal whether or not their climate commitments are real––or just more empty rhetoric.