BlackRock sends climate signal to Big Oil

Source: By Avery Ellfeldt, E&E News reporter • Posted: Thursday, May 28, 2020

Larry Fink, chairman and CEO of BlackRock Inc. BlackRock yesterday voted in favor of several climate-friendly measures during shareholder meetings of Exxon Mobil Corp. and Chevron Corp. Shannon Stapleton/REUTERS/Newscom

Wealth behemoth BlackRock Inc. leveraged its extraordinary shareholder power yesterday against Exxon Mobil Corp. and Chevron Corp. in an effort to signal its climate concerns with the supermajors.

The world’s largest money manager threw its weight behind several climate-related shareholder proposals and voted against two corporate directors during the companies’ annual meetings, held virtually yesterday.

At Chevron, BlackRock cast its shares in favor of a stockholder resolution that called on the company to issue a report describing if — and how — its lobbying activities align with the goals of the Paris climate agreement.

Fifty-three percent of shares were cast in support of the nonbinding proposal — with BlackRock’s whopping 6.7% stake pushing the vote past a majority threshold.

BlackRock, which has been criticized by environmentalists for historically voting against key environmental resolutions, promptly disclosed and explained its vote online, noting that the decision wasn’t meant to be “punitive.”

“Rather, we believe this is a further point of refinement to solidify best in class reporting amongst US oil and gas peers,” BlackRock said.

“In our view, the company could provide investors with a more detailed explanation of the alignment between Chevron’s political activities and the goal of the Paris Agreement to limit global warming to no more than two degrees Celsius, which the company supports,” the Wall Street giant added.

The asset manager likewise took a bold stance during Exxon’s annual meeting, when it opposed the reelection of two board members and backed a proposal that pressed the company to separate the roles of CEO and board chairman.

BlackRock said that despite a long history of engaging with Exxon on a swath of issues, the money manager continues to have “several areas of significant concern.”

Those include Exxon’s emissions reduction goals and the progress of two board members — Kenneth Frazier and Angela Braly — on implementing rigorous climate risk disclosures.

“We have still not seen the substantive action we would expect given the material climate risks facing the company, and the concern expressed to the company by investors, including BlackRock,” the firm wrote online.

Despite BlackRock’s support, the proposal drew only 32% of shareholders’ votes, and all of the board members were reelected.

The votes come on the heels of years of pressure from finance-savvy climate advocates — and BlackRock CEO Larry Fink’s recent commitment to use the firm’s muscle to hold corporations accountable for their progress on major sustainability issues (Greenwire, Jan. 14).

Fink promised to enhance transparency around those efforts to show that the asset manager could be taken at its word.

Timothy Smith, who directs shareholder engagement at Boston Trust Walden, an asset manager that focuses on sustainability, commended BlackRock for taking a “very strong, confrontational stand.”

“Today, they demonstrated that if they’re really unhappy with the company’s performance on climate, they’ll vote against the board,” Smith said.

He added that the firm “broke precedent” when it decided to immediately disclose and explain some high-profile votes, and to report its votes quarterly rather than annually.

Even still, environmental advocates have raised concerns that BlackRock has only disclosed its votes at 22 companies — despite having participated in more than 2,200 annual meetings so far this year. They’ve also noted that the asset manager has continued opposing some climate-related shareholder resolutions at companies including Exxon, Chevron and Royal Dutch Shell PLC.

“It sends a very important message to Exxon that they are on the wrong path here,” said Eli Kasargod-Staub, the director of Majority Action, a shareholder advocacy nonprofit. “At the same time, it underscores just how much more the asset managers can, and should, and need to be doing around these key votes.”