Tag: BlackRock

BlackRock reports on investment stewardship activities in connection with climate change

Although it may seem like the last millennium, it was only in January of this year that the CEO of BlackRock, Laurence Fink, in his annual letter to CEOs, announced a number of initiatives designed to put “sustainability at the center of [BlackRock’s] investment approach.” (See this PubCo post.) According to Fink’s letter, “[c]limate change has become a defining factor in companies’ long-term prospects.” Although he had seen many financial crises over the course of his long career, in the broad scheme of things, they were all ultimately relatively short-term in nature.  Not so with climate change: “Even if only a fraction of the projected impacts is realized, this is a much more structural, long-term crisis.” And investors are now “recognizing that climate risk is investment risk,” making climate change the topic that clients raised most often with BlackRock.  To that end, BlackRock announced a number of new initiatives, among them “strengthening our commitment to sustainability and transparency in our investment stewardship activities.” As part of that initiative, BlackRock said that it would hold companies accountable if they failed to make sufficient progress. That position came in the face of press reports, like this one in the NYT, highlighting what appeared to be stark inconsistencies between the BlackRock’s advocacy positions and its proxy voting record, protests outside of its offices by climate activists, letters from Senators and charges of greenwashing. So what has been the result?  BlackRock has just published a report describing its investment stewardship actions taken during 2020 in connection with climate and other sustainability issues. Given that BlackRock is the largest asset manager, companies may want to take note.

BlackRock puts sustainability at the center of investment strategy, expects more transparency in sustainability disclosure

Was it the heartbreaking photos of scorched koalas in Australia?  Was it the pressure from activists such as As You Sow, which submitted a shareholder proposal asking for a report on how the company plans to implement the new Business Roundtable statement of purpose?  (See this PubCo post.) Was it the press reports, like this one in the NYT, highlighting what appeared to be stark inconsistencies between the company’s advocacy positions and its proxy voting record? Was it the protests outside of the company’s offices by climate activists?  The letters from Senators? The charges of greenwashing? Whatever the precipitating factor, in this year’s annual letter to CEOs, Laurence Fink, CEO of BlackRock, the world’s largest asset manager, announced a number of initiatives designed to put “sustainability at the center of [BlackRock’s] investment approach.” What’s more, he made clear that companies need to step up their games when it comes to sustainability disclosure.

BlackRock CEO promotes corporate “purpose”: should corporations step into the governmental vacuum?

In this year’s annual letter to CEOs, BlackRock CEO Laurence Fink once again advocates the importance of a long-term approach, at the same time mourning the prevalence of political dysfunction and acknowledging the resulting increase in public anger and frustration: “some of the world’s leading democracies have descended into wrenching political dysfunction, which has exacerbated, rather than quelled, this public frustration. Trust in multilateralism and official institutions is crumbling.”  For a moment, I thought he was going to veer off into “American carnage,” but instead his focus is on the responsibility of corporations to step into the breach: “Unnerved by fundamental economic changes and the failure of government to provide lasting solutions, society is increasingly looking to companies, both public and private, to address pressing social and economic issues. These issues range from protecting the environment to retirement to gender and racial inequality, among others.” 

BlackRock issues proxy voting guidelines for 2018 proxy season

As discussed in this PubCo post, BlackRock has recently issued its 2018 Proxy Voting Guidelines for U.S. Securities.  Because BlackRock is reportedly the largest asset management firm (with $6.3 trillion under management), its voting guidelines will matter to more than a few companies.  And BlackRock takes its proxy voting seriously. With the growth in index investing, CEO Laurence Fink has argued, asset managers’ responsibilities of engagement and advocacy have increased, given that asset managers cannot simply sell the shares of companies about which they have doubts if those companies are included in index funds.

BlackRock advocates that at least two women be on each company board

The lede from the WSJ is that “for the first time,” BlackRock (reportedly the largest asset management firm with $6.3 trillion under management) is “stating publicly that companies in which it invests should have at least two female directors.” According to the WSJ, the new disclosure, just one component of BlackRock’s recently posted Proxy Voting Guidelines for U.S. Securities (more on the guidelines to come in a later post), “represents a small but significant shift for one of the largest shareholders of American companies.”  Board diversity has been a consistent issue for several large institutional investors in recent years but without much specificity, and reportedly, BlackRock has, in the past, quietly encouraged companies to have a minimum of two women on their boards. Now, BlackRock is trumpeting that standard publicly.

SEC-NYU Dialogue on Securities Markets focuses on shareholder engagement

While the topic of last week’s fourth SEC-NYU Dialogue on Securities Markets was shareholder engagement—focusing on the roles of institutional and activist investors—  the real hot topic was the recent letter to CEOs from BlackRock’s Laurence Fink, which was at least mentioned on every panel. (See this PubCo post.)

When theories collide: what happens when the shareholder preeminence theory meets the stakeholder theory?

Laurence Fink, the Chair and CEO of BlackRock, has issued his annual letter to public companies, entitled A Sense of Purpose.  As in prior years, Fink advocates enhanced shareholder engagement and a focus on long-term strategy development. (See this PubCo post and this PubCo post.) What’s new this year is that he is also advocating that companies recognize their responsibilities to stakeholders beyond just shareholders—to employees, customers and communities.  Holy smokes, Milton Friedman, what happened to maximizing shareholder value as the only valid responsibility of corporations?  

Deregulation? What deregulation? Two (persistent) campaigns for enhanced disclosure requirements

Notwithstanding the deregulatory emphasis of the current administration, two campaigns are currently being waged to convince the SEC to adopt new regulations mandating more disclosure—one related to human capital management and the other related to a frequent target, corporate political spending. Are these just pipe dreams? Is it time for a reality check? Or might there be some basis for believing that this SEC might act on these requests?

Asset managers support shareholder proposals for board diversity—will it make a difference?

There’s been chatter about board gender diversity for a long time and, while there has been some modest progress, we have yet to see any dramatic breakthroughs. Now some of the largest asset managers are not just talking the talk, they are also walking the walk.  Will it make a difference?  Time will tell.

BlackRock sets its priorities for board engagement

by Cydney Posner Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in […]