BlackRock engaged with companies in record numbers over the past year on sustainability and other issues, and held more directors accountable, the asset manager said Thursday in its "Investment Stewardship Annual Report."
Part of the heightened activity was spurred by clients of the firm, whose equity strategies are mostly in index funds. "Investor expectations of companies and asset managers have never been higher than they were this year," said Michelle Edkins, managing director with BlackRock's Investment Stewardship team, in an interview.
In the latest annual corporate reporting period ended June 30, BlackRock had a record 3,000 engagements with more than 2,000 companies, representing 61% of the value of its equity assets under management. It opposed at least one management proposal at 37% of the 16,200 shareholder meetings where it voted.
Dissatisfaction with some directors not acting in the long-term interests of their shareholders led BlackRock to vote against 5,100 of them. "We held more directors accountable than previous years," Ms. Edkins said.
Specific issues with corporate board directors that led to negative votes included a lack of independence and overcommitted directors, a shortcoming highlighted by the COVID-19 crisis.
Another 1,500 of the negative votes were about the lack of board diversity. "We think diversity is incredibly important. Boards are ultimately decision-making bodies, and there is a lot of evidence that diverse boards make better decisions," Ms. Edkins said.
The firm engaged on other issues raised or heightened by COVID-19, with more than 400 discussions with companies about their responses and 1,000 on corporate strategies. "There is definitely a distinction between the companies taking a long-term approach," she said.
Another key issue this past year was climate change, with a focus on how companies address it. "We are looking to see enhanced disclosure around climate change," she said, adding that there is growing awareness by companies of the need to improve disclosure on climate risk and other environmental issues, as well as social risks.
Companies are also getting more used to the idea of engaging with shareholders, with a third or more meeting with them.
BlackRock has also increased its own reporting disclosure, issuing 45 voting bulletins that explain their voting decisions to clients, she said.