The Vanguard Group has announced that it has only approved 2% of environmental and social resolutions brought by shareholders in 2023, a significant decrease from the 12% approval rate recorded last year. This follows a similar trend seen by BlackRock, as both investment giants reject a considerable number of climate and social proposals. This shift in stance reflects the current pushback against the environmental, social, and governance (ESG) movement, which the companies had previously supported.
In its Vanguard Investment Stewardship brief for the US region, released on Tuesday, Vanguard reported an increase in the number of environmental and social proposals received during this proxy season. Shareholders brought 359 such resolutions, compared to 290 in 2022. The report highlighted a 50% rise in proposals relating specifically to environmental matters, with the most common subject being “target-setting for greenhouse gas emissions.” Additionally, Vanguard noted that proposals addressing social topics, such as racial equity, reproductive rights, and pay gaps, were also received. Notable proposals in the consumer sector focused on unionization and worker safety.
Vanguard stated that it evaluated each proposal on a case-by-case basis, considering the specific merits and the context of the individual companies. The decline in support for these resolutions was attributed to the high volume and nature of the proposals, as well as improvements in company disclosures that made many resolutions redundant.
On the other hand, BlackRock, the world’s largest asset manager, also reported a significant increase in rejected proposals in its 2023 Investment Stewardship report. Out of the record 813 proposals it voted on, 742 were turned down, including 373 (93%) social and climate proposals. Both Vanguard and BlackRock credited the rise in proposals to the guidance published by the Securities and Exchange Commission in November 2021, which expanded the scope of permissible proposals to cover “significant social policy issues.” While SEC Chairman Gary Gensler praised this guidance, Republican SEC members and lawmakers criticized it for creating confusion. BlackRock stated that this change allows lower-quality proposals to appear on company ballots and that many proposals failed to identify material risks that could impact a company’s financial performance or acknowledge improvements in disclosures and practices.
These rejections of ESG proposals align with a broader trend of resistance against the movement, which seeks to advance green energy transition and left-wing social priorities through the financial sector and large corporations. BlackRock CEO Larry Fink recently revealed that he no longer uses the term ESG, as it has been weaponized by both the far left and the far right, leading to unproductive conversations.
(Source: Reuters)
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