BlackRock has warned it will vote against most shareholder green activism this year for being too extreme, in a significant U-turn by the world's biggest money manager.
The US multinational investment-management corporation said it was concerned about proposals to stop financing fossil-fuel companies, including forcing them to decommission assets and setting absolute targets for reducing emissions in their supply chains.
It comes as BlackRock said Russia's invasion of Ukraine has impacted the transition to net zero, adding that short-term investment in traditional energy sources is now required to boost security.
The Telegraph reports that, in a stewardship report, the company stated: "We do not consider (the proposals) to be consistent with our clients' long-term financial interests."
It added: "Many of the climate-related shareholder proposals coming to a vote in 2022 are more prescriptive or constraining on companies (than last year) and may not promote long-term shareholder value."
Last week, Barclays also defied green activists with a pledge to invest in new oil and gas projects to help Europe wean itself off Russian fossil fuel.
BlackRock has ballooned to manage more than £7.3trillion in assets, giving it significant stakes and influence in many of the world's largest businesses.
Its update represents a significant volte face for the group which has been at the forefront of Wall Street's push to encourage companies to shun fossil fuels and transition to greener alternatives.
In January 2020, chief executive Larry Fink, said "climate risk is investment risk" as he positioned BlackRock as a leader in ethical, social and governance (ESG) investing.
He also warned that climate change posed the biggest-ever risk to financial markets.
Mr Fink said at the time: "Climate change is different. Even if only a fraction of the projected impacts is realised, this is a much more structural, long-term crisis. Companies, investors, and governments must prepare for a significant reallocation of capital."
The decision to distance itself from "prescriptive" climate change policies comes as institutional investors face criticism for allegedly pushing political agendas.
A BlackRock spokesman said yesterday: "BlackRock is interested in companies' strategies and plans for responding to the challenges - and capturing the opportunities - of the energy transition, because they will have a direct impact on our clients' investment outcomes.
"Voting on both director re-election and well-crafted shareholder proposals can be helpful expressions of investor sentiment. We continue to see voting on shareholder proposals playing an important role in our stewardship efforts."
FTSE 100
The UK's top share index, the FTSE 100, was down 143 points at 7,204 shortly after opening this morning, following yesterday's 104-point gain.
Brent crude futures were down 1.11% at $106.19 a barrel.
Companies reporting today
- Full-year results: 3i Group, BT Group
- Half-year results: Grainger
- Trading statements: Balfour Beatty, Coca-Cola HBC, Convatec, Hargreaves Lansdown, RHI Magnesita, Rolls Royce