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Shaun BismanPartner [email protected] 212-921-9365 Theo Allen
Associate [email protected] 646-568-1157
In December, BlackRock released their 2021 proxy voting guidelines and a new report that summarizes their stewardship expectations for the year. These updates highlight BlackRock’s stringent expectations for diversity, equity, and inclusion (DE&I) and environmental risk, and they provide a clearer path for the asset manager to vote against companies that do not meet them. This proxy season, BlackRock has signaled their intent to support shareholder proposals without pausing to evaluate the usefulness of engagement.
Emphasizing Sound Corporate Governance and Sustainable Actions
BlackRock’s Investment Stewardship Expectations Report stresses the asset manager’s efforts to promote sound corporate governance and business practices that help clients maximize long-term shareholder value. In doing so, the report provides the rationale behind the key policy changes BlackRock expects to implement this year, many of which display a clear environmental focus. In early 2021, BlackRock will release their engagement priorities and supporting key performance indicators for the year.
In their Investment Stewardship Expectations Report, BlackRock asks companies to demonstrate the following three items over the next year:
- Board and workforce diversity consistent with local market best practice
- An understanding of key stakeholders and their interests
- Plans to align their businesses with the global goal of net zero GHG emissions by 2050
These items and the voting guidelines arise from the developments BlackRock has seen in 2020, and they indicate a marked shift in their approach to shareholder proposals.
2021 U.S. Proxy Voting Guidelines
Breaking with tradition, BlackRock released their proxy voting guidelines before the start of the new year. These guidelines serve as mechanisms for BlackRock to put their stewardship philosophy into practice.
The table below highlights compensation-related policy changes and other key updates:
Focus Area |
Update |
Executive Compensation | BlackRock added the following disclosure:
Prior to the changes noted above, BlackRock had a short section on executive compensation. Previous policy noted they will generally vote for executive compensation proposals, except that they typically oppose shareholder proposals on issues where the company already has a reasonable policy in place and if the company’s history suggests that the issues raised are not likely to present a problem for that company. |
Human Capital Management (HCM)
New Section |
|
Director Overboarding |
|
Board Oversight | BlackRock will consider voting against committee members and/or individual directors in the following circumstances:
|
Responsiveness to Shareholders |
|
Board Composition |
|
Increase in Authorized Common Shares |
|
Stakeholder Interests
New Section |
|
Golden Parachutes |
|
This article highlights changes to BlackRock’s voting policies. For full detail related to all BlackRock’s proxy voting guidelines, please visit: