Investors slam BlackRock and JPMorgan on climate contradictions

A group of investors are urging industry giants BlackRock and JPMorgan to review their proxy voting records amid concerns they don’t match the firms’ public declarations about climate change.

Mercy Investment Services and Boston Trust Walden have written to BlackRock and JPMorgan respectively, expressing disappointment that the companies’ voting practices appear inconsistent with their statements about the urgent need to tackle environmental issues.

“This contradiction poses reputational risk for the company with both clients and investors. Moreover, proxy voting practices that ignore climate change seem to ignore significant company-specific and economy-wide risks associated with negative impacts of climate change,” Mercy Investment’s letter to BlackRock states.

As a result, the investors have filed shareholder proposals requesting BlackRock and JPMorgan undergo a review of their proxy voting policies and report back on any changes they’ll make.

According to BlackRock’s 2019 proxy voting record, the investment titan voted against virtually all climate-related resolutions, voting for only six out of the 52, which included requests for better disclosure and adoption of greenhouse gas reduction goals.

In contrast, investment firms such as PIMCO, Allianz, Alliance Bernstein and MFS supported the majority of these climate-related resolutions.

BlackRock’s record in 2018 was no better. A review by Ceres found the investment firm only voted in favour of climate-related investor proposals a lowly 10% of the time, putting it near the bottom of the table in terms of shareholder action and support.

This is despite BlackRock publicly warning about the risks of global warming on investor portfolios. It also voted to require oil behemoth Exxon Mobil to produce a climate change report back in 2017, which at the time was regarded as a milestone in investor-led climate efforts.

Backing up Mercy Investment’s sentiments, Boston Trust Walden’s letter to JPMorgan warned that a review of the banking mammoth’s proxy voting record was both “important and timely”.

“At present the bank votes against troubling environmental and social issues while voting for a number of governance changes, a curious division in proxy voting,” the letter states.

JPMorgan’s 2019 proxy voting record reveals it voted in favour of just two out of 52 climate change resolutions, despite the company declaring on its website that it has taken a lead in “addressing the challenges and opportunities of a carbon-constrained environment”.

The firm also boasts about being a founder of a New York Green Exchange, which provides environmental futures, options and swap contracts for markets focused on solutions to climate change and renewable energy.

And like BlackRock, JPMorgan is also a member of the UN-backed Principles for Responsible Investment, the leading organisation that encourages investors to vote conscientiously on ESG issues.

Boston Trust’s criticism of JPMorgan is not the first time the bank has come under shareholder scrutiny.

Its chairman and CEO Jamie Dimon has frequently clashed with investors over his large pay packages, while shareholders have been calling on the banking giant to split the chair and CEO role to boost the board’s effectiveness and transparency.

So far, these calls have fallen on deaf ears.

Dimon also raised eyebrows in 2015 when he dubbed shareholders “lazy” for following recommendations from proxy advisers on how they should vote.

In addition, a recent report by influential environmental group Rainforest Action Network (RAN) named the JPMorgan as the biggest funder of fossil fuels and fossil fuel expansion. According to the report, its volume of finance for fossil fuels between 2016 and 2018 was a shocking 29% higher than the second-placed bank, Wells Fargo, standing at $196bn.

An investigation by The Guardian earlier this year also found BlackRock had a massive $87.3bn of shares in oil, coal and gas companies.

Last Updated: 28 November 2019
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