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Two major investment firms, BlackRock Inc. and The Vanguard Group Inc., strongly defended themselves Wednesday against a report that accused them of "greenwashing" their responses to climate risk.

Majority Action, a California-based corporate governance nonprofit, issued the report Tuesday titled "Climate in the Boardroom: How Asset Manager Voting Shaped Corporate Climate Action in 2019."

The report accused New York-based BlackRock and Pennsylvania-based Vanguard of "using their shareholder voting power to shield corporate boards from accountability … for their failures on climate and their irresponsible lobbying."

It said BlackRock and Vanguard voted overwhelmingly against the climate-critical shareholder resolutions, with BlackRock supporting just five of 41, and Vanguard only four. "At least 16 of these critical climate votes would have received majority support of voting shareholders if these two largest asset managers had voted in favor of them," the report said.

In contrast, the report praised the votes of Legal & General Investment Management, BNP Paribas Asset Management, PIMCO and Standard Life Aberdeen on climate-related proposals.

Majority Action recommended that asset owners examine the proxy voting activities of asset managers, hold the asset managers they hire to account for inadequate voting policies, and consider those activities when evaluating and selecting asset managers.

Both Vanguard and BlackRock have said in the past they were working closely with companies to disclose and manage their climate-related risk.

Neither BlackRock chief legal officer Christopher Meade nor Vanguard general counsel Anne Robinson responded to a request for comment Wednesday.

But BlackRock's Farrell Denby, vice president in corporate communications, told Corporate Counsel, "Blindly supporting proposals is not a responsible approach to stewardship. … It would be wrong to equate good governance with voting against management without regard for a proposal's impact."

Denby said his company engaged 207 companies globally on the topic of climate risk this past year. He noted that's "a number that far exceeds the 36 climate-related shareholder proposals that came to a vote in the U.S. As the numbers demonstrate, we put a priority on understanding how a company is addressing climate-related issues even in the absence of shareholder proposals."

Vanguard made a similar argument. Spokeswoman Carolyn Wegemann said, "While voting at shareholder meetings is important, it is only one part of the larger corporate governance process. We regularly engage with companies on our shareholders' behalf and believe that engagement and broader advocacy, in addition to voting, can effect meaningful changes that generate long-term value for shareholders."

Wegemann said this proxy year Vanguard engaged with some 250 companies in carbon-intensive industries to discuss their governance and disclosure of climate risk. She also cited the firm's advocacy efforts with organizations and initiatives such as the Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and United Nations Principles for Responsible Investment.

Majority Action, however, said BlackRock's and Vanguard's company engagement efforts fall short and "lack demonstrable results in changing company behavior."

Among the 16 proposals that would have passed with the two firms' support were two requiring ExxonMobil and Duke Energy to report on their lobbying activities, and several that would have required energy companies, including ExxonMobil, to name an independent board chair.

At ExxonMobil, proponents argued that the company has responded to climate change inadequately "in part driven by lack of independent board oversight."

Citing the report, other climate advocacy groups also criticized the two companies.

For example, attorney Danielle Fugere, president of As You Sow, issued a statement accusing BlackRock and Vanguard of being inconsistent with their own stated purpose, while also jeopardizing shareholder value.

"There is little time left to change the trajectory of a warming globe, yet these firms are abdicating the power of their proxy vote to help protect the climate, the economy, and investor portfolios from systemic climate risks," Fugere said.