Press Release: Shareholders to BlackRock: It’s Time to Walk the Talk, Implement Business Roundtable’s ‘Purpose of a Corporation’
Thursday, December 19, 2019
Shareholder advocacy non-profit As You Sow filed a shareholder resolution last Friday with BlackRock, asking for a report on how the company plans to fully implement the Business Roundtable (BRT) “Statement on the Purpose of a Corporation,” which was signed by Chairman and CEO Larry Fink in August 2019. The statement calls for a stakeholder-centric view that holds employees, customers, supply chain, and communities in which a company operates on an even standing with shareholders. In essence, it says that 50 years of Milton Friedman capitalism was misguided and 181 Business Roundtable members that signed the purpose agree.
Shareholders are demanding that companies exercise leadership on a broader range of environmental, social, and governance issues. They want company actions to be integrated with the BRT statement, not contradict it. For example, BlackRock is the largest investor in companies building new coal power capacity across the world with a total investment of more than $11 billion USD. BlackRock’s 2019 publicly reported proxy voting record reveals consistent votes against virtually all climate-related resolutions. A recent New York Times article notes that Blackrock votes its proxies against shareholder advocates on 93 percent of all social and environmental shareholder resolutions filed. These actions are not aligned with the new “purpose of a corporation,” but instead undermine the core principles of the statement.
“Shareholders have long understood that corporate short-term practices reduce the long-term value of companies and create lasting harm to society as they externalize costs and pollute the commons,” said Andrew Behar, CEO of As You Sow. “The antiquated notion that corporations exist for the sole benefit of shareholder returns was long overdue for a rewrite given its basic conflict with long-term value creation.”
The New York Times also pointed out that BlackRock’s chairman and chief executive, Larry Fink, has repeatedly called on other CEOs to lead their companies toward “social responsibility” and greater “purpose.” Yet BlackRock had the worst voting record of the major index companies, Morningstar’s statistics showed. This includes voting against As You Sow’s resolution asking for disclosure on slavery in supply chain even after it was supported by Institutional Shareholder Services’ proxy advisors.
“Shareholders are ready to put these words into action for the benefit of all,” Behar continued. “Together we can reshape the definition of capitalism to accommodate all stakeholders, including those that have been increasingly left behind to create a safe, just, and sustainable world.”