BlackRock will focus on board quality, compensation and sustainability issues including biodiversity, according to a BlackRock Investment Stewardship report released Friday.
The report on 2022 engagement priorities said that for corporate boards, the focus will be on directors helping to create long-term value, including managing ESG issues and other stakeholder interests. Boards will be assessed on director independence, tenure limits, election cycles, diversity, and time commitments, the report said.
"When considering a company's commitment to diversity, BIS looks at factors such as alignment with market-level expectations, the addition of a director who enhances the board's diversity within the previous year, the existence of time-bound targets for increasing board diversity, average board tenure, and public statements that focus on efforts to advance diversity, equity and inclusion in the board room," the report said. To measure that, "we depend on companies providing clear and comprehensive disclosure."
Executive compensation and more disclosure around pay practices will be another priority in 2022. Compensation outcomes "are increasingly assessed in the context of the impacts a company has had on key stakeholders over the relevant period," the report said.
Company leadership on climate risks and opportunities will also matter, it said, but continued investment in carbon-intensive industries will be necessary. "At BlackRock, we expect to remain long-term investors in carbon-intensive sectors because these companies play crucial roles in the economy and in an orderly energy transition," it said. It will not consider Scope 3 emissions disclosure and commitments "essential" for supporting directors.
BlackRock will also look at how companies assess their impact and dependence on natural capital, including clean air, water, land, minerals and forests, "as ecosystems come under stress." This year, it said, BlackRock wants to see companies' plans for managing biodiversity, deforestation and water.