BlackRock has sent a stern warning to the C-suite that the need for “urgent action” to address climate change will see it back more shareholder proposals.
One year on from its decision to dump thermal coal, BlackRock has warned businesses that it will now take the side of shareholders rather than giving management the benefit of doubt.
“We see voting on shareholder proposals playing an increasingly important role in our stewardship efforts around sustainability. Accordingly, where we agree with the intent of a shareholder proposal addressing a material business risk, and if we determine that management could do better in managing and disclosing that risk, we will support the proposal,” BlackRock said.
BlackRock said that the change from its previous policy – which saw it engaging to explain its views and giving management “ample time” to address their concerns – was driven by the need for “urgent action” on sustainability issues.
“Where we agree that the issue and intended outcome of a proposal are consistent with long-term value creation, we expect the board and management to meet the spirit of the request,” BlackRock said.
“Where our analysis and engagement indicate a need for improvement in a company’s approach to an issue, we will support shareholder proposals that are reasonable and not unduly constraining to management.”
The international asset management giant engaged with some 2,000 companies and held over 3,000 engagements from 1 July 2019 to 30 June 2020, covering 61 per cent of its clients’ equity investments by value.
“Where we believe companies are not moving with sufficient speed and urgency, our most frequent course of action will be to hold directors accountable by voting against their re-election. Over the same period, we voted against 55 directors/director-related items on climate-related issues. This is a tool available to us in virtually every market we invest in on behalf of our clients,” BlackRock said.
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