BlackRock
Inc
BlackRock opens door for retail
investors to vote in proxy battles
UK pilot
by $8tn asset manager signals ‘revolution in shareholder democracy’,
says chief executive Larry Fink
|
Larry Fink,
BlackRock chief executive, has drawn scrutiny for his views on
corporate governance and climate change © Bloomberg |
Brooke Masters
in New York NOVEMBER 2, 2022
BlackRock will allow
retail investors to vote on proxy battles for the first time as it
fends off criticism that its stance on environmental, social and
governance issues is at odds with some of its shareholders.
The world’s largest
asset manager plans a pilot with UK pooled funds to enable their
investors to vote on contested proposals in 2023.
Larry Fink, BlackRock’s chief executive, said technology was
enabling a “revolution in shareholder democracy” that will “transform
the relationship between asset owners and companies” as he announced
the plans on Wednesday.
BlackRock’s one-year-old
Voting Choice programme already allows institutional investors holding
$1.8tn in assets to decide how they want their shares to be voted, and
the owners of $452bn have done so. The UK pilot marks the first time
that BlackRock will offer the same opportunity to smaller investors.
“It’s clear there are
investors who don’t want to sit on the sidelines; they have a view on
corporate governance, and they want a meaningful way to express those
views,” Fink wrote in a letter to clients and company chief
executives. “Voting Choice has the power to transform the relationship
between asset owners and companies.”
BlackRock’s initiative to empower shareholders comes as the $8tn
manager is under attack for its votes on environmental social and
governance matters Republican treasurers in conservative US states
have pulled more than $1bn from the group, alleging that it is hostile
to fossil fuels. Some Democrats complain that the fund manager should
be pushing companies harder to reduce carbon emissions.
Index-tracking funds run
by BlackRock and competitors State Street and Vanguard control as much
as 20 per cent of most large US public companies, so their votes on
contested issues are closely watched. But BlackRock has come in for
particular scrutiny as Fink has been outspoken about the group’s
stewardship efforts to improve corporate governance and address
climate change.
BlackRock said that
automation and improved online communication were important to its
efforts to offer individualised proxy voting options. In the UK, the
manager will be working with Proxymity, a digital platform, to extend
the Voting Choice programme to retail investors for the 2023 proxy
season.
The fund manager already
allows institutional investors to choose among voting their shares
directly, letting BlackRock vote their shares or following one of 14
different proxy voting recommendations developed by advisers Glass
Lewis or Institutional Shareholder Services.
Efforts to offer proxy
voting choice to US small investors are complicated by laws that
specify that the investment adviser of an American retail mutual or
exchange traded fund is the one who votes the shares held by the fund.
But other asset managers
are also trying to find ways to let retail investors vote. Charles
Schwab’s asset management arm last month announced a pilot project
that will poll investors in one mutual fund and two ETFs to gather
their general preferences on core issues. Vanguard said on Wednesday
that several of its equity index funds plan next year to “pilot a
number of proxy voting policy options for individual investors to
choose from”.
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