Historically, BlackRock has earned a reputation for publicly supporting improvements to corporate sustainability and social responsibility, but not necessarily punctuating that support through proxy votes. Although this style of engagement is often more mutually beneficial to companies and investors, BlackRock was criticized by certain activist investors for only supporting 10% of ESG proposals in the first quarter of 2020 while actively opposing three other environmental proposals.
Election of Directors
- BlackRock voted against 10% of directors globally versus 8% the year prior.
- In the Americas region, 61% of votes against directors were due to insufficient gender diversity on the board, and 14% were due to executive compensation concerns.
- BlackRock highlighted concerns about COVID-19 adjustments at the majority of those companies, specifically calling out “in-flight adjustments that companies made to reward executives despite missing financial performance targets, reducing their workforces, or taking government financial support. [BlackRock] opposed executive pay programs when companies were not able to explain how these adjustments supported long-term, sustainable value creation.”
Say-on-Pay
- BlackRock increased its opposition to say-on-pay from 4% to 5% of companies in the Americas.
- The investment firm provided guidance on what it expects from the use of ESG metrics within the compensation plan:
- ESG performance metrics should reflect material business factors and be aligned with a company’s long-term strategy.
- Metrics should be carefully explained, clearly connecting what is being measured and rewarded alongside business goals to long-term performance.
- Performance targets should be stretching (rigorous) and well tested.
Shareholder Proposals
- BlackRock doubled its support for shareholder proposals, from 17% last year to 35% this year.
- It supported 64% of environmental proposals, 35% of social proposals, and 32% of governance proposals.
- The firm is calling on companies to disclose workforce diversity, including race, gender and ethnicity, consistent with EEO-1 survey data.
- In the US, the firm supported 36% of proposals, including those covering racial equity audits, diversity, and disclosure of the EEO-1 report.
