BlackRock has pledged to support more shareholder resolutions on climate and social issues at annual meetings, as the world’s largest asset manager faces increasing pressure to use its influence to change corporate behavior. companies.
The $ 7.8 billion asset manager has known for years critical after overwhelmingly supporting management rather than voting for shareholder proposals on issues such as climate change.
However, BlackRock said Thursday that supporting investor resolutions will play an “increasingly important role in our sustainability management efforts.” The change in approach follows a “significant review” of its policies regarding voting at the AGM and discussions with companies, the New York-based group added.
This move is likely to have significant repercussions in the corporate world given that BlackRock is a significant shareholder of many public companies.
Sandy Boss, head of investment management at the asset manager, said BlackRock has traditionally given companies the “benefit of the doubt” that they take issues such as climate change seriously, but there are has a “sense of urgency now” that businesses need to take on more quickly. action.
“The dialogue with business has changed so much during this year,” said Ms. Boss, who joined the group in May and oversaw the review. “The risk of a pandemic has brought social risk to the fore. Climate risk is at the fore, ”she said.
The engagement comes less than a year after BlackRock chief executive Larry Fink said durability would be at the heart of the group’s investment strategy, warning that issues such as global warming posed huge financial risks for companies and investors.
Since then, however, critics have accused the asset manager of hypocrisy, after failing to support several key climate resolutions in Australia and elsewhere at this year’s annual meetings. According to data from Proxy Insight, the asset manager supported fewer environmental votes at shareholder meetings in the 12 months ending in June compared to the previous year.
Ms Boss said BlackRock has traditionally focused on private engagement with companies and voting against directors.
But she added that BlackRock was now more willing to support shareholder resolutions because the wording of the proposals became “more specific,” such as asking for a plan on how a company would manage climate risk.
As part of the review, BlackRock also found a “very strong relationship” between a proposal that garners the support of 30 to 50 percent of shareholders and companies taking action to address concerns, Ms. Boss said.
The engagement was greeted with caution by critics.
“It is clear that BlackRock’s previous vague commitment did not change companies’ approach to climate action,” said Diana Best of BlackRock’s Big Problem campaign, a network of climate activists groups.
“We hope this latest announcement is the start of BlackRock making it clear that a company’s failure to move towards decarbonization will have real consequences,” she added.
Ms Boss warned that BlackRock “is not pushing the button to support all climate resolutions”, but “what we will do is support a proposal if it is reasonable”.
The asset manager has not set any target for the number of resolutions it will support.
Starting next year, BlackRock will also ask companies in the United States, Europe, the Middle East and Africa to disclose statistics on ethnic diversity, with Asian companies being asked to disclose information on the diversity of ethnicities. sexes. Ms Boss warned that BlackRock could start voting against companies that do not make an effort to ensure boards, management and workforce reflect the companies in which they operate.