BLACKROCK’S LATEST PROXY REPORT: BlackRock underlined its efforts to give its clients more direct participation in corporate shareholder votes and highlighted its record of voting against shareholder proposals focused on climate in its latest proxy voting report. This comes amid sustained Republican scrutiny of investing based on ESG, or environmental, social, and governance.
The asset manager said it supported only a small minority of environment-related proposals in the 2023-24 proxy voting year, even though they made up the majority of shareholder proposals, increasing by 13% year-on-year.
“Consistent with last year, we found that most shareholder proposals on climate and natural capital issues (environmental), as well as company impacts on people (social), were overreaching, lacked economic merit, or sought outcomes that were unlikely to promote long-term shareholder value,” the report reads.
The asset manager’s investment stewardship program supported just 4% of environmental and social proposals, compared to 6.5% last year.
The decrease in support comes as Republicans probe financial companies and their environmental, social, and governance investing goals, alleging their efforts could be in violation of antitrust laws. Last month, Judiciary Committee Chairman Jim Jordan sent letters to over 130 U.S. companies, retirement systems, and government pension programs, requesting information on their interactions with green investor groups. In December 2023, Jordan subpoenaed BlackRock and State Street Global Advisors for documents related to ESG investing.
More details: The greatest proportion of proposals BlackRock supported this year addressed corporate governance matters, with the asset manager increasing its support for these proposals compared to last year. The proposals the company supported were ones that sought to enhance minority shareholders’ rights, for example. Read more from Nancy here.
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FORD SCRAPS PLANS FOR ELECTRIC SUV: The Ford Motor Company is canceling plans for an electric three-row SUV and is instead replacing it with hybrid models as car manufacturers adjust to a market with less-than-expected EV demand, Nancy writes .
The deets: Previously, the auto giant had said it would delay plans for the new electric vehicle by two years, for a 2027 release date. On Wednesday, however, Ford announced it will be scrapping the model altogether, citing cost-conscious EV customers and amplified pricing pressures.
“We are committed to innovating in America, creating jobs, and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction,” Ford President and CEO Jim Farley said. “We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths.”
The company has said its EV business is expected to lose about $5 billion this year. The change to hybrid, which has a shorter battery range but a longer overall range when combined with gas, is expected to cost $400 million and could result in additional expenses and cash expenditures of up to $1.5 billion.
The company will continue to make EVs, however, but at a slower pace. It will start making an EV commercial van in 2026 and two new pickup trucks in 2027. Ford will also decrease its mix of annual capital expenditures dedicated to EVs, from about 40% to 30%. Read more on that here.
TECH GIANTS OVERSTATING EMISSIONS GAINS BY USING QUESTIONABLE CREDITS: Some of the largest tech companies are hiding their carbon footprint through the use of renewable energy credits that inaccurately lower their net emissions count, a new Bloomberg Green analysis found .
Microsoft and other leading artificial intelligence companies have recently claimed that the tremendous amounts of power they use for data centers to support AI are not adding emissions, since they use renewable energy sources.
The reality: Companies are buying credits, otherwise known as unbundled renewable energy certificates, to claim emissions reductions when making voluntary disclosures to the CDP, a nonprofit that is in charge of a global environmental reporting system. Current accounting rules allow for the consideration of the unbundled RECs to help total a company’s carbon footprint, even though it is questionable whether they represent the use of additional renewable energy production.
But if companies were not allowed to use RECs, Amazon would have to admit that its 2022 emissions are 8.5 million metric tons of CO2 higher than reported – tripling the company’s reported disclosures. Microsoft’s reported 280,000 tons could be 3.3 million tons higher – and Meta’s carbon footprint could reach 740,000 tons, compared to its levels that were reported near zero.
OIL DEMAND IN CHINA DROPS AMID EV TRANSITION: Oil demand in China has notably decreased as the country has pursued a transition toward electric vehicles and natural gas, Business Insider reports .
Moving towards EV and hybrid vehicles has caused a decline in demand by 500,000 barrels a day, per Goldman Sachs analysts.
What’s going on broadly: Expansion within China’s EV industry has allowed three of its top manufacturers to hit record sales in June. In a separate Goldman Sachs report, analysts predicted more sales in renewable technologies could push China’s car fuel consumption to peak in 2025 – years ahead of most developing economies.
But: The analysts are also warning this could be a red flag underlining China’s dependence on manufacturing.
"While oil data now send a too pessimistic message about China economic activity (fuel switching does not lower GDP), overcapacity highlights the fragility of China's manufacturing bet," the analysts wrote.
The oil slowdown also coincides with the country facing a weaker macroeconomic outlook. Read more on that here.
EU’S REDUCED TARIFF ON TESLA: The European Union has reduced its expected tariffs on Chinese-made Teslas by more than half, giving the company a boost compared to rivals who were slapped with higher duties, CNN reports.
The bloc reduced its tariff for Tesla to 9%, lower than the 20.8% indicated in July. The tariffs are on top of the EU’s regular 10% duty on car imports – an effort the group says would level the playing field and counter what it considers unfair subsidies. Still, the tariffs are lower than those imposed on other Chinese automakers.
Some Chinese companies that have joint ventures with EU carmakers will also benefit from lower duties, set at 21.3% rather than the 36.3% maximum rate.
The reaction: China’s Commerce Ministry said on Tuesday it “firmly opposes and is highly concerned” about the EV tariffs. The move comes after an extensive probe launched by the EU into the subsidies of Chinese EVs – which produced results that the ministry called “distorted.” A day later after the extra tariffs were announced, the Chinese government launched an anti-subsidy investigation into the imports of EU dairy, according to Politico EU.
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