Why ESG is no longer a Priority?
Reduction in ESG Support:
BlackRock slashed its support for environmental and social (E&S) shareholder proposals, dropping from 47% in 2021 to only 4% in 2024, due to concerns over their effectiveness.
Proposals Lacking Economic Merit:
BlackRock argued that many of these ESG proposals were not financially sound, lacking the necessary economic merit to create real shareholder value.
Ineffective Solutions to Complex Issues:
Many proposals were seen as overly prescriptive & did not provide actionable solutions for the issues they claimed to address, often being redundant or impractical.
Focus on Long-Term Value:
The firm emphasized a return to focusing on share- -holder value, suggesting that many ESG initiatives failed to address long-term financial sustainability.
Corporate Responsibility Shift:
BlackRock maintained that the responsibility for addressing complex environmental and social issues should fall on governments, not private companies.
Overly prescriptive, lacking economic merit or, asking companies to address material risks, they are already managing.
Rationale Behind BlackRock’s Decision
BlackRock’s decision to reduce its backing for ESG proposals stems from the growing realization that many of these initiatives lack the economic merit needed to drive real change. While ESG proposals are intended toaddress crucial environmental and social challenges, they are often seen as overly prescriptive and fail to offer practical, financially viable solution. BlackRock’s leadership pointed out that many propos–als duplicate efforts companies are already making, offering little added value for investors.
Additionally, the firm has faced external political pres-sure, particularly from conservative factions, which argue that ESG-focused investing reflects “woke” cor–porate agendas. In response, states like Florida have enacted laws preventing public pension funds from investingin ESG strategies, further complicating the financial viability of supporting such proposals. Ultim–ately, BlackRock’s shift reflects a growing skepticism toward ESG initiatives that fail to balance social goals with economic reality.
References:
- NYU Stern Center for BHR
- IR Magazine
- Forbes.com
BlackRock’s recent shift in ESG support is a wake-up call for leadership at board level. Too often, sustainability is mistaken for CSR or basic compliance, missing the bigger picture of long-term value
creation. As leaders, it’s critical to integrate sustainability into the core business strategy, making it a driver of innovation and resilience. This isn’t just about meeting regulatory demands—it’s about future proofing organizations and ensuring sustained growth in an evolving market. -: Nilesh Mehta
Vice President Sustainability, Sparrow RMS
