Investment giant BlackRock released its 2021 Voting Spotlight, providing insights into the firms stewardship activities and proxy voting over the past year. The report indicates an increased focus on engagement for BlackRock investment Stewardship (BIS) on topics such as climate and natural capital, and an uptick in votes against management.
Earlier this year, BlackRock outlined its 2021 stewardship priorities, identifying the key focus areas for engagement, including Board Quality and Effectiveness, Climate and Natural Capital, Strategy, Purpose, and Financial Resilience, Incentives Aligned with Value Creation, and Company Impacts on People. According to the new report, BIS’ top focus area for engagement was Climate and Natural Capital, with 2,330 engagements focused on this topic, followed by Strategy, Purpose and Financial Resilience with 2,200 engagements, and Board Quality and Effectiveness with 2,150 engagements.
In terms of its proxy voting record, BlackRock reported voting against management on one or more proposals at 42% of shareholder meetings, compared to 39% last year. BIS also reported voting on more than 64,000 director elections, voting against 10% over the year.
Votes against directors were prompted most often by corporate Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. More concerns, including lack of board independence (2,222 votes against), lack of board diversity (1,862 votes against), and executive compensation concerns (931 votes against). In the Americas.
BlackRock has significantly increased its engagement and voting efforts on climate issues. Last year, the company reported identifying 244 companies that it assessed as not adequately addressing their exposure to or management of climate risk. In the new report, BlackRock reported that many of these companies have made significant progress towards integrating climate risk into their business models and disclosures. This year, BIS reports that it has expanded its climate focus universe to over 1,000 companies, representing 90% of its public equity portfolio Scope 1 and 2 greenhouse gas emissions. Over the past year, BIS voted against 255 directors and against 319 companies for climate-related concerns.
Diversity is a key focus area for BlackRock as well, at the board and company level. According to the new report, insufficient board gender diversity was the top reason for a vote against directors in the Americas. The company also stated that “the past year highlighted that companies still have a long way to go to achieve workplaces that are truly diverse, equitable, and inclusive.” That said, BlackRock has reported improvements in these areas. According to the report, BIS believes that its engagements with management teams has contributed to companies accelerating efforts to advance gender and ethnic diversity. At the board level, BlackRock reports that “the growing focus on and awareness of diversity is starting to have a noticeable impact on corporate boards,” citing a Bloomberg study that found that “as of June 2021, all the companies in the S&P 500 Index have at least one woman director, with an average of nearly 30% of board seats held by women.”
Click here to view the full BlackRock Investment Stewardship report.
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