BlackRock has come down hard on ESG stragglers, opposing the re-election of more than 5,000 directors as it broadens its investment stewardship actions.
BlackRock opposed the re-election of more than 5,100 directors, raising questions on board quality, lack of independence and diversity, and overcommitment, while also holding directors to account for “not meeting (its) expectations on climate risk management”.
“This very difficult year has provided the clearest demonstration yet that strong, purposeful leadership is essential to a company’s resilience and ability to recover from shocks and disruptions,” said Sandy Boss, Blackrock’s global head of investment stewardship.
“For this reason, we take a firm line in holding accountable the management and boards of directors of these businesses when we do not see sufficient progress on the issues that matter in creating sustainable, long-term value for our clients, who are the ultimate owners of these companies.”
BlackRock saw a 48 per cent increase in engagements for the 12 months to 30 June 2020 (3,000 vs over 2,000 in the prior year) and anticipates that COVID-19 will lead to more action as investors push companies to take a more active role in tackling problems like climate change, social and racial equity, and demographic and technological upheaval.
“In the year ahead, we anticipate more engagement and voting to be focused on the extent to which companies are addressing these issues within their businesses,” Ms Boss said.
“We expect a year of continuing disruption and uncertainty. Yet we remain convinced that companies focused on their purpose, with a credible strategy to deliver for all their stakeholders, will be well-positioned to create sustainable, long-term value for our clients.”
To date, BlackRock is one of the highest-profile companies to make serious moves towards a more sustainable future, ditching its active investments in thermal coal and joining activist group Climate Action 100+.
“Climate change has become a defining factor in companies’ long-term prospects,” CEO Larry Fink said in his annual letter to CEOs.
“Last September, when millions of people took to the streets to demand action on climate change, many of them emphasised the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”
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