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In August, BlackRock, the world’s largest investment firm, reported that it had significantly reduced its support for shareholder proposals addressing environmental and social issues. From July 2023 until June of this year, the firm backed only 4% of the 493 such proposals. In 2021, BlackRock supported 47% of such proposals by shareholder activists.

Joud Abdel Majeid, BlackRock’s global head of investment stewardship, defended the retreat, claiming that many of the proposals were “overly prescriptive, lacking economic merit or asking companies to address material risks they are already managing.” But this attempt at rationalization obscures a larger trend. BlackRock’s pullback is part of a broader move by large investment firms that are shying away from ESG strategies. They are doing so, at least in part, in response to attacks by Republican politicians like Florida Governor Ron DeSantis. Egged on by right-wing groups like the Heritage Foundation, these conservatives have accused investment firms of practicing “woke capitalism.” At least 20 states have enacted local laws to prohibit public pension funds under their control from investing in ESG funds. I reached out to BlackRock but they have not responded.

BlackRock’s retreat on issues like environmental sustainability is significant in part because of the company’s size and influence; it manages more than $10 trillion in assets. Before the current pushback, Larry Fink, BlackRock’s CEO, had become increasingly outspoken in promoting environmental sustainability as a hedge against global warming. In his 2020 letter to CEOs, for example, Fink wrote: “We will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.” Five years later, the firm has reversed course, voting against almost all resolutions that address environmental and social topics.

Read the full Forbes article.
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Michael Posner is the Jerome Kohlberg Professor of Ethics and Finance, Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.