To navigate the climate proposal, BlackRock employs a new voting policy.

(VOR News) – The $10.5 trillion money BlackRock manager’s assets will vote differently on shareholder proposals than the funds that have specific climate change mandates. This is BlackRock’s most recent attempt to navigate the political rift over decarbonization.

The world’s biggest asset management said in a statement on Tuesday that clients of funds with a climate focus will now be allowed to voice their opinions aggressively in shareholder resolutions pertaining to decarbonization.

All of BlackRock’s funds are susceptible to climate risk.

Still, funds that follow its recently released “climate and decarbonization stewardship guidelines” will evaluate whether or not companies are really attempting to keep the rise in world average temperature to 1.5 degrees Celsius over pre-industrial levels.

The Paris Agreement, which over 200 nations joined, set this goal as the optimal threshold.

The head of BlackRock, Larry Fink, was a vocal early proponent of integrating sustainability into the investment process. In his letter to investors for the 2020 annual meeting, he raised the topic of climate change, but he has subsequently faced criticism from all sides.

With the new stewardship policy, BlackRock is attempting to reconcile US regulations compelling fund managers to focus on financial returns with the expectations of its clients in Europe and the US, who want the company to promote decarbonization.

In a letter to clients, Joud Abdel Majeid, Global Head of Stewardship at BlackRock, said that the policy will start to apply to 83 funds in the fourth quarter. $150 billion worth of assets are held by these funds, all of which are headquartered in Europe.

Conservatives in the US are starting to push back, denouncing the movement as “woke capitalism.” This is true even if a large number of progressives and investors in Europe favor advancing the effort to limit global warming as quickly as is practical.

The boards of directors of funds with a special responsibility for climate change in the United States and Asia will be asked if they would like to carry out the policy later this year. The climate-related option that BlackRock intends to offer will also be available to clients who invest through independently managed accounts.

“BlackRock will continue to undertake our stewardship responsibilities with a sole focus on advancing clients’ long-term financial returns in line with our benchmark policies,” Abdel Majeid stated.

“BlackRock will continue to handle all other funds.”

As a result, the climate-focused funds might adopt stances on business votes related to fossil fuels and other decarbonization-related issues that are completely at odds with those of the other funds in the group. They will follow BlackRock’s primary criteria for additional environmental, social, and governance considerations in all other cases.

Since the spike in energy prices that coincided with Russia’s full-scale invasion of Ukraine two years ago, BlackRock has been the subject of intense political discourse. Conservatives have tried to limit or boycott the company’s offerings. Simultaneously, proponents of climate change expressed their annoyance at the company’s sharp drop in backing for shareholder resolutions related to the issue.

Since then, the asset manager has claimed that a large number of recently passed shareholder resolutions by businesses were unduly prescriptive and did not support customers’ financial interests.

BlackRock withdrew its support from Climate Action 100+, an investor group founded to motivate companies to combat global warming, at the beginning of this year. Instead of carrying on with global participation, it chose to move membership to its smaller foreign subsidiary.

BlackRock has also implemented a policy that gives institutional clients and some retail investors authority over how their shares are voted on proxy matters.

Investors may choose to entrust BlackRock with their vote or they can choose from over a dozen policies created by proxy advisers Institutional Shareholder Services and Glass Lewis through the “voting choice” scheme.

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