Questions Submitted for BlackRock’s 2020 AGM
May 20,2020 -- In January, 2020 BlackRock CEO Larry Fink made grand statements about the importance and urgency of climate change, saying BlackRock would place sustainability at the center of its investment strategy. To date, BlackRock’s actions have not lived up to that rhetoric.
In May, members of the BlackRock’s Big Problem network submitted the following questions on BlackRock’s commitments and climate action in advance of the asset manager’s 2020 annual general meeting.
1. Coal and other fossil fuels: Despite making some bold new commitments in January on climate, BlackRock continues to be the biggest funder of coal companies. The coal divestment criteria that was introduced excludes less than 20% of the global coal industry. The policy doesn’t address the part of the industry that is the number one source of CO2 emissions: coal plant operators. As long as coal-heavy utilities stay in the portfolio, BlackRock hasn’t finished its sustainability homework.
To make your policy impactful:
Will you commit to using absolute thresholds such as those used by the Global Coal Exit List to capture all of the biggest coal mining and coal power companies?
The policy also doesn’t include any language on oil or gas. Will you commit to expand your coal policy to other dangerous fossil fuels, including Arctic drilling, Amazon crude oil and tar sands by the end of 2020?
Your policy only applies to your active investments, however, to be truly effective it should apply across all business lines, including passively managed funds which represent the majority of your portfolio. Will you commit to apply your coal commitments to all passively managed funds?
2. Deforestation: BlackRock has acknowledged the financial, material, and climate risks posed by the agribusiness sector, and has committed to engage with (some) agribusiness companies regarding these risks, which largely stem from the sector’s role in driving deforestation, human rights abuses, chemical pollution and biodiversity loss. However, BlackRock has no investment policy to guide such engagement.
Will you adopt a high-level policy on deforestation and related risks, and a detailed implementation plan that outlines specific standards for companies, the metrics BlackRock will use to measure company behavior, and the consequences for violations of those standards, including exclusion from ESG funds, as you’ve done with coal? If so, what is your timeline?
In 2010, the Consumer Goods Forum, the world’s largest consortium of retail and manufacturing companies, committed to achieving zero-deforestation in its supply chains by 2020; yet during that time period commodity driven deforestation has in fact increased dramatically, and the CGF has admitted failure. BlackRock has hundreds of billions invested in these companies, yet BlackRock’s voting record on deforestation shows that you voted against every deforestation-related shareholder resolution at CGF companies during this period. Deforestation and land use change is the second largest source of greenhouse gas emissions responsible for the climate crisis. In light of the CGF’s failure and BlackRock’s commitment to centering climate in its investment strategy, what is BlackRock’s plan to assure that companies are mitigating deforestation and associated risks, including land grabbing and human rights violations, and how will you do this in a way that is time-bound and accountable to stakeholders?
3. Indigenous rights: FPIC (Free, Prior and Informed Consultation and/or Consent) is a set of principles enshrined in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the International Labor Organization’s Indigenous and Tribal Peoples Convention 169 (ILO 169). It is an internationally recognised principle that a community or a group of individual smallholders has the right to give or withhold its consent to proposed projects that may affect the lands its members traditionally own or use.
What steps is BlackRock taking to ensure that all companies it is currently invested in are respecting the rights of indigenous peoples to FPIC?
4. ESG criteria: In January, Fink stated BlackRock will provide more ESG offerings including sustainable versions of flagship funds and it will also engage in more comprehensive company-wide ESG risk analysis. While this is a step in the right direction, it is not enough to match the scale of climate emergency. BlackRock’s newest commitments center around excluding certain thermal coal producers from ESG products. For these funds to be sustainable, ESG products should not include any companies which are expanding any fossil fuel extraction, production, or consumption, or directly contributing to global deforestation.
How is BlackRock defining criteria for ESG funds? Is that criteria actually aligned with - or does it go beyond - the goals of the Paris Agreement?
Will you commit to publicly call for universal common definition of “sustainability” and support efforts, including the European green taxonomy, which aims to set a consistent, transparent, and high bar for “sustainable” ESG definitions?