BlackRock gives anti-ESG investors a proxy voting option

BlackRock has added an “anti-ESG” option for big clients who want to vote against environmental, social, or governance ballot issues at annual meetings for the companies in their portfolios.

Today, BlackRock announced two voting options from proxy advisory firm Egan-Jones, including a “wealth-focused policy” that opposes “stakeholder capitalism” proposals. That includes policies that seek to promote diversity, equity, and inclusion as well as environmental initiatives like measuring, reporting, and reducing greenhouse gas emissions. However, the policy provides exceptions for ESG proposals that are “directly tailored to revenue generation.”

Those options will be available for institutional clients beginning next year, though the company could later extend them to retail clients as well. BlackRock’s Voting Choice option, which started in 2022, has been used by clients representing $600 billion of about $2 trillion in assets eligible for the program, according to the firm. Earlier this year, BlackRock rolled out proxy voting choice to its biggest ETF, the $454.5 billion iShares Core S&P 500 ETF, representing the first time the option has been available to retail investors.

“We continue to innovate and provide more choice to our clients who wish to take a more direct role in the proxy voting process,” BlackRock investment stewardship global head Joud Abdel Majeid said in the company’s announcement. “We’re pleased to add a third proxy advisor to our platform and the option for more clients to customize their voting guidelines to reflect their specific goals and objectives.”

With the Egan-Jones proxy advisor addition, institutional clients will have 16 proxy voting choices among three proxy advisors, not counting BlackRock’s own policy that lets the firm decide how shares are voted.

The additions give investors more choices, the firm said, though the new policies have come after BlackRock has for years been the main target of anti-ESG campaigns at state and federal levels. While the company has been accused by the political right of being a liberal ESG promoter, it is also one of the biggest investors in the fossil fuel industry and has been criticized by environmental groups and sustainable investors for that.

The name of wealth-focused proxy voting policy “is misguided at best,” said Andy Behar, CEO of As You Sow, citing ESG initiatives as being the financial interests of companies and shareholders.

“It just runs counter to the data on actual wealth creation,” he said. “The idea of voting against diversity on the [corporate] board, voting against climate transition plans, voting against justice at the companies – it doesn’t allow companies to create a culture that attracts the best and the brightest.”