BlackRock is the world’s largest asset manager. They are a large player in the financial markets and have become even more influential with their recent stance on ESG investing. Their change of conscience has led to increased investor interest in sustainable investing, but investors must be careful not to let sentimentality distract them from sound investments that align with their values.,
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Carl Icahn is encouraging BlackRock Inc. BLK -0.37% and other major index-fund managers focusing on socially conscious investment to back his proxy campaign for improved care of pregnant pigs at McDonald’s MCD 0.18 percent Corp.
As part of his effort, the billionaire activist investor, who has a $50,000 investment in McDonald’s, proposed two members to the fast-food chain’s board of directors in February, a departure from his usual battles for changes in financial strategy and the like.
At the annual meeting on May 26, McDonald’s shareholders will vote on whether to endorse Mr. Icahn’s candidates or the company’s slate. He claims that, despite being at the forefront of the environmental, social, and governance investment movement, BlackRock and others have subjectively chosen which values are important to them, and that animal welfare is undervalued.
“They have immense potential to do good or harm,” he said in an interview on Wednesday, alluding to large index fund distributors like BlackRock, which manages around $10 trillion in assets. “What shocks me is how frequently they stay out of it and let boards assume that they would defend them in a competition.”
In February, Mr. Icahn, who has a tiny investment in McDonald’s, proposed two directors to the fast-food chain’s board of directors.
Reuters photo/Brendan McDermid
The housing of breeding pigs, or sows, by McDonald’s suppliers is at issue. Mr. Icahn wants McDonald’s to force all suppliers to cease confining animals in tiny containers, which are generally 7 feet long and 2 feet broad. For the first four to six weeks of a sow’s pregnancy, and occasionally longer, many McDonald’s suppliers employ so-called gestation boxes. Suppliers claim they increase efficiency in breeding, but Mr. Icahn and his candidates claim they are cruel.
Mr. Icahn blasted McDonald’s for spending $16 million to defend itself against his proxy challenge rather than putting the money toward rescuing pigs from cages in a letter to McDonald’s shareholders that was seen by The Wall Street Journal on Thursday.
He stated, “It would have been better—far better—than spending that money defending McDonald’s directors who have failed in this area.”
McDonald’s did not react to a request for comment right away.
Mr. Icahn is looking for a repeat of last year’s remarkable success at Exxon Mobil Corp., when fledging activist Engine No. 1 LLC gained three seats on the oil giant’s board of directors with only a fraction of the company’s stock. Support from major asset managers such as BlackRock, Vanguard Group, and State Street Corp. cemented the agreement.
The top five asset managers together control a median 30% of most S&P 500 companies, a 2018 JPMorgan Chase & Co. report found, making winning their support crucial.
Engine No. 1 pushed Exxon on renewable energy while also arguing that the measures would help the stock’s performance. Mr. Icahn has said that he does not plan to profit from his campaign, yet one of his candidates, Maisie Ganzler, has stated that removing the crates will be beneficial to business.
“McDonald’s needs consumers,” she said, “and every time the American people has been given the opportunity to vote on these matters, they have always voted in favor of the animals.”
Mr. Icahn also nominated Leslie Samuelrich, head of Boston-based mutual fund Green Century Capital Management, in addition to Ms. Ganzler, an executive at food-service provider Bon Appétit Management Co.
Mr. Icahn started lobbying McDonald’s to do rid of the crates about a decade ago, at the request of his daughter, Michelle Icahn Nevin, who was working on the subject at the Humane Society of the United States at the time. McDonald’s promised in 2012 that by 2022, it will no longer purchase pork from suppliers that utilize crates.
The two sides are now at odds on where they want to go with that goal. McDonald’s claims that it slipped behind owing to Covid-19 and other issues, but that by the end of 2022, it hopes to obtain 85 percent to 90 percent of its U.S. pork volumes from “verified” pregnant sows not kept in gestation cages. Sows may spend the first four to six weeks of their pregnancies in gestation cages before their pregnancies are verified.
Mr. Icahn claims that the pledge’s initial goal was to eliminate the use of gestation cages completely.
Mr. Icahn’s organization claims that “they are just lowering the length of time sows spend imprisoned in gestation cages and using deceptive terminology to mask their failed promise.”
Ms. Samuelrich said that the board needs individuals like her and Ms. Ganzler to guarantee that obligations are met.
Cara Lombardo can be reached at [email protected]
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BlackRock is a company that manages investment funds and provides financial advisory services. The company was founded in 1988 and has its headquarters in New York City, United States. Its total assets under management were $6 trillion as of the end of 2018. BlackRock’s shares are listed on the New York Stock Exchange (NYSE) and trade under the symbol “BLK”. Reference: blackrock esg policy.
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