Through several publications, BlackRock has highlighted its view that certain social and environmental risks represent long-term risks to shareholder value. While CEO Larry Fink’s letter placed specific emphasis on climate risk, BlackRock Investment Stewardship is providing greater depth on specific engagement priorities.
BIS recently published its
engagement priorities for human rights. The publication is paired with the investor’s engagement priorities for
human capital management. Though the two share similarities, human capital management is positioned more for workforces in developed countries and highlights diversity, equity, and inclusion as well as competitive employee benefits and an overall adherence to workforce health and safety. All these touch on human rights, but the investor’s engagement priorities in the human rights publication are focused on workforces and communities in developing regions. The priorities include:
- Does the company prioritize human rights and adhere to a disclosure framework (OECD Guidelines, UN Sustainable Development Goals, etc.)? While a company is unlikely to admit it does not prioritize human rights, the use of a broadly recognized framework is the focus of this engagement.
- How does the board oversee human rights considerations? Does the full board or a specialized committee oversee related policies and procedures? What information is reviewed, and how frequently?
- How does the company identify, mitigate, and prevent human rights impacts? Which due diligence processes are used (human rights risk assessments, supply chain tracing, etc)?
- Does the company measure and/or assess the effectiveness of its efforts? What are the relevant metrics and targets and are third-party assurance providers used in the assessments?
- Does the company engage with affected stakeholders or collaborate with industry peers? This includes engaging with indigenous groups and protecting cultural heritage sites as well as initiatives to advance practices and address pervasive issues related to human rights.
Stakeholder advocates have criticized the business community for offering broad platitudes that do not mean much in practice. In the investment community, BlackRock has been hit by similar criticism. While the same could be said about these priorities (what company would say it does not prioritize human rights?) BlackRock is strongly indicating the need to see details including oversight structure, performance metrics, and mitigation planning.
