11/23/2020
Director Accountability a Top Priority for BlackRock
The Deal (11/23/20) Sattiraju, Nikitha
Ray Cameron, head of investment stewardship at BlackRock Inc. (BLK), said at a recent event that BlackRock will aim to hold individual board members accountable. In 2019, for instance, the firm voted against 5,000 directors due to issues such as lack of independence or poor progress on climate change or diversity. Cameron said the firm targets directors that "we think should have more responsibility, quite frankly, or should be assuming more responsibility for lack of progress." In addition to environmental risk and opportunities, BlackRock assesses four other categories on engagement, including board quality, corporate governance, capital allocation, and compensation. BlackRock had 3,000 engagements with companies, close to half of which were in the U.S. The firm voted in 16,000 meetings on more than 150,000 proposals, the vast majority of which were from management while less than 2% came from shareholders. Climate in particular continues to be a focal point for BlackRock, whose CEO Larry Fink wrote in a January letter to company heads that sustainability will be at the core of its investments moving forward. Of the 3,000 engagements BlackRock had with companies last year, over 1,200 of them were related to climate and the environment, Cameron said. As recently as May, for example, the firm voted against two of Exxon Mobil Corp.'s (XOM) director appointments for making “insufficient progress” on climate-related disclosures. Being vocal about specific directors is often a more effective way to enact change at the corporate level, rather than just supporting shareholder proposals that are often nonbinding, especially in the U.S. BlackRock says it is also looking at how companies have been treating employees during the pandemic as well as their progress on diversity and racial equity.
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