Efforts to connect building trades pension fund assets and union jobs got a major boost with BlackRock's adoption of the responsible contractor policy promoted by North America's Building Trades Unions.
The action announced Thursday is significant not only because of BlackRock's size, with $6.5 trillion in assets under management, but also because it is being applied to all assets and companies managed by the BlackRock Real Assets U.S. platform, with $17 billion managed in U.S. real estate and infrastructure funds.
Under the policy, which applies to funds and companies in which BlackRock has a controlling interest, the firm will support selection of contractors delivering quality construction, maintenance and operating services that provide training, fair wages and benefits to workers on those projects.
"This raises the bar and creates the opportunity for our other partners" to take similar steps, NABTU President Sean McGarvey said in an interview.
Wayne Fitzgerald, chief operating officer for the BlackRock Real Assets U.S. platform, said the firm has had product-specific RCPs across its U.S. funds, and this now extends the commitment to a platform level. "What we wanted to do was make a complete statement" across the real assets platform, Mr. Fitzgerald said in an interview.
With energy, power, renewables and equities all in growth mode, "we would like to set the standard. BlackRock is a vocal proponent of ESG. We want to see vendors that can deliver cost-effective services," and vendor risk is part of the due diligence investors are asking for, he said. "We know that benefits our investors, and we think the industry is seeing that. It's just good governance."
In the past few years, building trades unions with a collective $600 billion in pension fund assets have been increasingly demanding that asset managers and consultants connect some of the investments with opportunities to create union jobs.
In April, NABTU released its third annual report card on how well fund managers are making the connection. This year's ratings focused on asset managers for real estate and infrastructure funds. Of the 24 fund managers responding, 14 — including BlackRock — earned grades of A+ or A, while seven earned an F, two earned a B, and one got a C; another 32 firms did not respond. Categories include policy enforcement, union work hours, communication and neutrality in union organizing campaigns.
The report card is part of NABTU's Capital Strategies campaign to leverage pension fund assets, with $120 billion in agreements so far covering real estate and infrastructure investments. "These report cards are to educate our trustees on the companies they are investing in," Mr. McGarvey said.
"Now we are getting actual deals done under the policy. Success begets success."