BlackRock is giving some of its institutional clients a bigger say in proxy-voting decisions, according to a client letter sent Thursday.
Starting in 2022, eligible institutional clients in some index strategies, both separate accounts globally and some pooled funds in the U.S. and U.K., will have several proxy-voting options. New options include voting based on their own proxies, choosing from a menu of third-party voting policies and voting directly through BlackRock's voting infrastructure.
Investors not opting for any of the new choices will continue to be represented by BlackRock's voting policy and infrastructure.
BlackRock said in the letter, which was obtained by Pensions & Investments, that roughly 40% of the $4.8 trillion in index equity assets and $750 billion of pooled fund assets will be eligible for the new voting options. It is planning more ways to expand proxy-voting decisions for clients, the letter said, citing growing client interest in investment stewardship, as well as technology advances.
In comments provided by BlackRock, some pension fund officials welcomed the move. Maria Nazarova-Doyle, head of pension investments and responsible investing at U.K. defined contribution multiemployer plan Scottish Widows, with £140 billion ($189.6 billion) in assets, called it "a welcome step change for the industry. ... Our hope is that today's news will act as a catalyst for others in our industry to consider how they can more directly facilitate participation in proxy voting."
Chris Phillips, director of institutional relations and public affairs at Washington State Investment Board, Olympia, overseeing $171.5 billion in assets, including $134.4 billion in defined benefit plan assets, said the initiative "fits with the industry trend toward essential customization of investors' asset stewardship needs. All of this will help to create alignment with our corporate governance priorities and outcomes."
A separate report released Thursday by shareholder advocacy group Majority Action found that large money managers, including BlackRock and Vanguard Group, are not using their proxy votes to hold corporate directors accountable when it comes to climate change.
Majority Action analyzed 2021 voting decisions on climate by asset managers with more than $1 trillion under management and found that "most overwhelmingly used their proxy voting power to elect management-backed directors at large U.S. companies in climate-critical industries that have failed to align their business operations and strategy with limiting warming to 1.5°C."
Majority Action Executive Director Eli Kasargod-Staub said in an interview that BlackRock and Vanguard have committed to dealing with climate change but still vote for directors not doing so. "They are finally acknowledging the kind of responsibilities they have but then totally failing to align their actual voting decision-making." Mr. Kasargod-Staub said 2021 was a year of breakthroughs on shareholder proposals especially when large money managers back them. On climate voting, "we are seeing increasingly clear differentiation between leading asset managers who are enacting their fiduciary duties vs. those who are not," he said.
The report is available on Majority Action’s website.