BlackRock ESG priorities in 2017
BlackRock to focus on company transparency around key ESG issues
BlackRock's engagement priorities highlight their continued focus on ESG
With $5.1T in assets, BlackRock’s 30-person Investment Stewardship team engages with approximately 1,500 companies each year on ESG. BlackRock has highlighted five areas of focus for their engagement priorities for 2017-2018. The New York City-based firm has stated that Environmental, Social, and Governance issues are integral to their investment stewardship activities.
BlackRock takes a long-term view to its approach, looking for progress over time. Low, or bare minimum disclosure on any of the below topics would be a red flag and potential trigger for engagement with listed companies in their portfolios:
Governance: overall board accountability which includes the make-up of the board and the process for evaluating performance and skills; special focus on diversity and full-board expertise on topics with clear business-specific risks (such as climate change)
Long-term corporate strategy: clear accountability at the board level for the strategic plan, including transparency on tracking progress and challenges faced
Compensation that promotes long-termism: clearly demonstrated link of performance metrics that incentivize based on the long-term corporate strategy
Disclosure of climate risks: encourages use of Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) framework for disclosing how climate change presents risks and opportunities to the business; this includes focusing disclosure on the areas of governance, strategy, risk management and metrics and targets
Human Capital Management: looks for board accountability and clear strategy on how a company attracts and retains a stable and diverse employee base and maintains positive health and safety, labor relations, supply chain standards, etc.
Leaders Arena Recommendations for IR: While this series highlights BlackRock’s priorities, the issues are a good indication of what other leading responsible investors may also be focused on as they continue to demand transparency and accountability on ESG. Therefore, it pays for IROs to INTEGRATE ESG in their regular communication with investors and ENGAGE with key responsible investors.
Exploring ESG: A Practitioner’s Perspective; https://www.blackrock.com/corporate/en-us/literature/whitepaper/viewpoint-exploring-esg-a-practitioners-perspective-june-2016.pdf