BlackRock has been accused of double standards after it refused to back landmark environmental resolutions at two big Australian oil companies just months after the world’s largest asset manager warned global warming represented a risk to markets unlike any previous crisis.
The $6.5tn fund manager’s voting record at annual meetings has been closely scrutinised following chief executive Larry Fink’s letter to companies in January, where he announced BlackRock would put sustainability at the heart of its investment process and argued climate change could lead to a “fundamental reshaping of finance”.
But campaigners argued the asset manager was paying lip service to tackling climate change after it voted against resolutions calling for Woodside Energy and Santos to set targets in line with the Paris agreement, which aims to limit global temperature rises, and to disclose their lobbying.
BlackRock’s lack of support was out of kilter with many other investors. Some 43 per cent supported a resolution to require Santos to set Paris-aligned targets — the first time globally a targets-based resolution had received such high levels of support — while more than half backed a similar motion at Woodside. The strong support came following the devastating bushfires in Australia, which killed dozens of people and shone a spotlight on how big investors hold companies to account over climate change.
“Larry Fink has a lot to say about his firm’s climate credentials but next to nothing to show for it,” said Brynn O’Brien, executive director at the Australasian Centre for Corporate Responsibility, an advocacy organisation that filed the target resolutions at both companies.
“It is beyond time for BlackRock to decide whether it is on the side of a liveable planet, or not. We do not have another 12 months to waste.”
BlackRock said its votes were based on conversations with the oil companies and their responsiveness to investor concerns, and warned it could back similar resolutions next year if the businesses did not change. Outside the Australian votes, the asset manager said so far this year it had voted against 25 individual directors and two resolutions to discharge boards over environmental concerns, including at Finland’s Fortum and the US’s National Fuel Gas Company.
The asset manager said it supported the underlying goals of the climate resolutions, but flagged concerns about their inclusion of “scope 3” or customer emissions. “The complexity of meaningfully defining and implementing scope 3 targets will take time,” it added.
But Ms O’Brien said BlackRock’s votes displayed “a distinct lack of awareness, by failing to take into account the urgency the Australian bushfires have brought to the sector”.
“It is not enough for BlackRock to say it is attuned to these issues; now is the time for it to act,” she said.
Mark van Baal, founder of Follow This, which has filed climate-target resolutions for the upcoming annual meetings at European oil companies including Shell and Total, said BlackRock rarely went against management over climate change.
“The discrepancies between [Mr Fink’s] letter and his voting are getting bigger and bigger,” he added.
Ms O’Brien said BlackRock had justified its lack of support for the climate-related lobbying motions by arguing the companies had made public commitments to review their industry association membership, which neither had done at the time. BlackRock declined to comment.
Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, a think-tank, said BlackRock’s new focus on sustainability was welcome, but this needed to be followed by greater action.
“BlackRock has to be called out on this and they will progressively get better, because investors increasingly want this,” he added.