ESG Demand Up; BlackRock Increasing Support for Shareholder ESG Proposals

Reuters, citing Morningstar data reported that high demand for sustainable investment funds caused assets to rise 19% to a high of nearly $2 trillion in the first quarter, the  fourth quarter in a row that the sector’s assets have hit a record high. Morningstar said its data captures all the funds which claim to have a sustainability objective or which use ESG criteria when deciding which assets to buy and sell. Meanwhile, BlackRock is among asset managers who are paying more attention to shareholder ESG proposals in their proxy voting. According to a Wall Street Journal report, during the first half of the proxy year, BlackRock backed 91% of environmental proposals, 23% of social proposals, and 26% of corporate-governance proposals of the 170 ESG shareholder proposals it voted on. BlackRock’s new stewardship head said the asset manager made changes over the past year to ensure its votes were in line with its investment priorities, the WSJ reported. BlackRock was also among a handful of companies to vote in line with a group’s request that financial institutions conduct a racial equity audit of their firms. CtW Investment Group, working with the Service Employees International Union, has been asking systemically important financial institutions to conduct a racial equity audit that identifies, prioritizes, and remedies the adverse impacts of their policies and practices on non-white stakeholders and communities of color.  The groups filed shareholder proposals at banks, including Bank of America, Citi, Morgan Stanley, and JPMorgan, for the 2021 proxy season.  So far, BlackRock has agreed to conduct a racial audit according to a Bloomberg report. However, according to MarketWatch other companies have declined and asked their shareholders to reject the proposals, saying they are already doing enough to address inequity.