Vanguard joins BlackRock in rejecting more ESG proposals from shareholders
The Vanguard Group says it will have approved just 2% of environmental and social resolutions tabled by its shareholders in 2023, up from 12% last year Environmental, Social and Governance (ESG) movement. previously promoted by the investment giants.
Vanguard reported in its US region Vanguard Investment Stewardship Brief, released Tuesday, that the company has received an increased number of environmental and social proposals this proxy season, with shareholders submitting 359 such resolutions, compared to 290 in 2022.
The investment fund giant said the number of proposals related to environmental issues alone has increased by 50%, with the most common theme being “greenhouse gas emissions targets”.
“Across all sectors in the US, we have seen companies receive shareholder proposals on social issues such as racial justice, reproductive rights and wage inequality,” the company wrote in its report, adding that it also received “several notable proposals” in the consumer sector “in relation to union formation and occupational safety.”
Vanguard said it “assessed each individual case on its merits and in the context of the particular company,” and said the decline in support for such actions was “largely due to the scope and nature of the proposals,” as well as improvements in the company’s disclosures that made many decisions unnecessary.
Vanguard’s report comes a week after BlackRock, the world’s largest wealth manager, reported in its 2023 Investment Stewardship Report that the company had 742 of the record 813 proposals it voted on and 373, or 93%, of the social – and had rejected climate proposals.
Both companies attributed the higher number of proposals in large part to guidance released by the Securities and Exchange Commission in November 2021, which expanded the scope of allowable proposals to include those addressing “material social policy issues.” At the time, SEC Chairman Gary Gensler praised the guidance, saying it “brought more clarity,” while Republican SEC members and lawmakers criticized it for creating more confusion.
The change, BlackRock said in its report, effectively allows more shareholder proposals, including those of lower quality, to appear on corporate ballots. The company specifically noted that numerous proposals failed to clearly “identify an issue associated with a material risk that could affect a company’s ability to generate sustained financial returns.” And most climate and social proposals didn’t take into account the “improvements that companies have made to their disclosures and practices.”
Meanwhile, the surge in rejected ESG proposals comes amid a nationwide push against the movement, which broadly seeks to promote a green energy transition and left-wing social priorities by the financial sector and big business.
BlackRock CEO Larry Fink said FOX Business Last month, he stopped using the term ESG because it was “weaponized by the far left and by the far right.” And we lose the conversation.”
FOX Business’ Thomas Catenacci and Reuters contributed to this report.
