{"id":13134,"date":"2021-06-14T15:00:37","date_gmt":"2021-06-14T13:00:37","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=13134"},"modified":"2023-02-08T16:25:34","modified_gmt":"2023-02-08T15:25:34","slug":"blackrock-climate-failures-european-shareholder-season","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2021\/06\/14\/blackrock-climate-failures-european-shareholder-season\/","title":{"rendered":"BlackRock\u2019s climate failures during European shareholder season"},"content":{"rendered":"

14th June 2021 – Joint Article By Reclaim Finance, Urgewald & BlackRock’s Big Problem<\/b><\/p>\n

In <\/b>his annual letter this year<\/u><\/b><\/a>, Blackrock\u2019s CEO Larry Fink declared <\/b>once again<\/u><\/b><\/a> that \u2018climate risk is investment risk\u2019. Ahead of the 2021 voting season, the asset management titan also published a <\/b>memo<\/u><\/b><\/a> setting out what it would be expecting from polluting companies. After criticism of BlackRock\u2019s <\/b>oversized role in fuelling the climate crisis<\/u><\/b><\/a>, the promise it undertook to take voting action against directors and to support shareholders proposals based on climate considerations (1) established high expectations. <\/b><\/p>\n

In the end, BlackRock didn\u2019t come close to matching its rhetoric. As we outline below, the 2021 shareholder season in Europe shows that BlackRock continues to vote in a manner inconsistent with climate science, and is failing to force the required action among major polluters.<\/span> <\/b><\/p>\n<\/div><\/div><\/div>

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The Verdict<\/h1><\/span>
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We have examined how BlackRock voted at the Annual General Meetings of the top 3 European oil and gas majors (2). <\/b><\/p>\n

The positives: <\/b>BlackRock voted for the climate resolution to bring BP into alignment with the Paris Agreement. However, BlackRock seems not to know where it stands regarding the British oil major as it voted in full support of management and stated clearly that it has no concerns regarding the quality of the company\u2019s climate strategy<\/u><\/a> and its oversight by the board.<\/p>\n

The negatives<\/b>: BlackRock voted in support of Total\u2019s and Shell\u2019s weak climate plans. In its voting bulletins<\/u><\/a>, BlackRock writes that the companies have a plan with goals that \u00ab\u00a0appear to be consistent with the Paris Agreement\u00a0\u00bb and enables them to manage risks. BlackRock\u2019s Total and Shell votes are especially worrying as the climate targets and strategies of the two oil majors were rated insufficient by the recent Climate Action 100+ benchmark.<\/u><\/a> Both have expansion plans that fall short of the level of ambition required to credibly claim alignment with a 1.5\u00b0C pathway and are in complete contradiction with the recent findings of the International Energy Agency<\/u><\/a>.<\/b> UK investor Legal & General, on the contrary, voted against Shell\u2019s and Total\u2019s<\/u><\/a> (3) plans and has since clearly stated that companies\u2019 disclosures should \u201csupport the alignment of oil and gas production to the goals of the Paris Agreement\u201d.<\/p>\n<\/div>

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BlackRock\u2019s Goal: Climate Leadership, or the Appearance of it?
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Our analysis based on the partial data released so far (4) shows BlackRock is shrugging off responsibilities despite its commitments and the huge influence it wields. BlackRock\u2019s voting bulletins<\/u><\/a> clearly lay out the rationale behind the votes: full support to investee companies as long as they seem to be limiting (short term) financial risks related to climate. Concretely, for European oil and gas majors, which have chosen to diversify towards clean energy more than their US counterparts<\/u><\/a>, BlackRock seems to consider it\u2019s enough for majors to invest more in renewables and simply consider climate risk in their plans, ignoring the impacts of their plans for oil and gas. <\/b>This explains BlackRock\u2019s renewed support for companies with fossil fuel expansion plans, despite such plans being incompatible<\/u><\/a> with a net zero world according to many analysts, including now the International Energy Agency.<\/p>\n

In sum, Blackrock\u2019s voting actions in Europe this year signify a half-baked, management-biased approach that falls far short of the strategy (5) it outlined a few months ago.<\/b> BlackRock CEO Larry Fink recently said in an online conference<\/u><\/a> that he didn\u2019t believe in divesting from public companies but rather in pushing companies to clean up their businesses. But if BlackRock has set itself up as the poster child for shareholder engagement, the truth is that it has failed miserably.<\/p>\n<\/div>

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Restoring Climate Credibility<\/h2><\/span>
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BlackRock should not wait for the next AGM season before reviewing its voting and climate policy. <\/b><\/span>Firstly, BlackRock must stop hiding behind hazy statements and <\/span>must adopt clear exclusion policies on the riskiest sectors for the climate, the environment and for local communities<\/b><\/span>. But <\/span>it\u2019s also long past time for BlackRock to update its own weak coal commitment, and exclude companies with no willingness to transition and which are planning new coal, oil and gas projects. <\/b><\/span>BlackRock still has a shocking $24bn invested in companies that have coal expansion plans<\/u><\/a>, such as Sumitomo and KEPCO. With bonds and shares worth over $110 billion, BlackRock is also the top investor in companies (e.g. Total, Shell and Eni) driving 12 of the most devastating fossil fuel expansion projects<\/u><\/a> of our time. <\/span>On the other hand, BlackRock must live up to its own climate commitments and the new IEA guidelines by voting against companies without credible fossil fuel exit strategies.<\/span><\/b><\/p>\n

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Notes :
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  1. BlackRock\u2019s expectations in the memo are that companies should disclose a baseline assessment of current GHG emissions and a net zero plan with \u201crigorous\u201d short, medium, and long-term targets to reduce emissions.<\/li>\n
  2. BP, Total and Shell are the biggest hydrocarbons producers in 2020 among European companies, with each producing more than 1000 million barrels (mmboe).<\/li>\n
  3. The rationale laid out by LGIM for Total is the need for further details \u201con how the company’s planned 15% reductions in total carbon intensity by 2030 are consistent both with global climate change scenarios and with the company’s planned upstream growth over the short-term\u201d.<\/li>\n
  4. BlackRock has not released voting bulletins for all oil and gas majors. However, it has for Equinor, the fourth biggest European hydrocarbon producer. Once more, the voting rationale is unclear as BlackRock voted for 2 shareholder resolutions (out of 10), against a resolution asking Equinor to stop fossil fuel exploration and reaffirmed its support for the company\u2019s board and its climate strategy<\/u><\/a>.<\/li>\n
  5. This strategy stated correctly that a \u201csignificant portion of the transition to a low-carbon economy hinges on the eventual retirement of fossil fuels, and it is particularly important for investors to understand the scope 3 emissions profile of oil, gas, and coal companies.\u201d<\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div>

    Find out more<\/span>:<\/span>
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