"Financial backing for climate-related resolutions by BlackRock and Vanguard decreases"

In a recent string of annual general meetings (AGMs), the world's two largest institutional asset managers, BlackRock and Vanguard, have maintained their cautious stance on environmental resolutions. Both firms, with assets under management totalling $19 trillion, have expressed concerns about proposals they deem "overly prescriptive, lacking economic merit, or asking companies to address material risks they are already managing."

This year, BlackRock supported only 20 out of 493 climate proposals, a significant drop from its 2021 support which accounted for nearly half of all proposals. Vanguard, on the other hand, did not back any environmental or social shareholder proposals this year.

The institution that submitted a proposal at this year's Shell AGM to align medium-term emission reduction targets with the Paris Agreement was Follow This. However, BlackRock and Vanguard voted in favour of Shell's Energy Transition Strategy instead, citing Shell's clear assessment of its plans to manage material climate-related risks and progress against the strategy.

Despite criticism from climate campaigners, the Shell Energy Transition Strategy does not foresee emission reductions within this decade. This has led to a record number of investors backing a resolution calling on Shell to align medium-term emission reduction targets with the Paris Agreement.

Exxon, another oil giant, faced criticism from asset owners such as CalPERS for taking two shareholders to court over a climate resolution. Despite the row over shareholder rights, Vanguard voted in favour of reappointing Exxon's leadership, stating that it had raised concerns. BlackRock has not yet disclosed how it voted during the Exxon AGM, but revealed that it had multiple meetings with the oil giant over the past year.

Glass Lewis recommended a vote against Exxon's independent director, Joseph Hooley, due to the shareholder rights issue. However, Hooley and his colleagues received the backing of around 90% of all shareholders in the Exxon AGM.

Both BlackRock and Vanguard justify their stance on environmental resolutions by stating that the proposals are either "overly prescriptive" or "not financially material." Vanguard's latest Investment Stewardship Report for the US market explains their stance on such proposals in detail.

It is worth noting that the support for climate proposals by both managers has declined further this year compared to last year. No information has been provided about how BlackRock or Vanguard voted for other oil and gas firms' AGMs in the year.