BlackRock's Voting Behaviour Raises Questions
BlackRock is the largest investor in the Swiss market. Its holdings in Swiss companies give the asset manager voting rights at these companies’ general meetings. How does BlackRock use this voting power?
BlackRock has a 5.8% share in publicly listed Swiss companies and is thus clearly the largest shareholder on the Swiss market (ahead of Vanguard with a 2.8% share). As such, BlackRock, like all other shareholders, has voting rights at the general meetings of the relevant companies. These large holdings in the Swiss economy makes BlackRock a heavy weight shareholder.
BlackRock's Proxy Voting Guidelines
BlackRock views itself as an investor with a responsibility to keep a close eye on the companies it invests in and to represent the interests of BlackRock clients. BlackRock writes in its "Investment Stewardship" that it is in the interest of its clients to "promote sound corporate governance as an informed, engaged shareholder". In this document, the firm summarises the guidelines it applies in its engagement with companies and as a proxy for its clients. These guidelines cover, among other things, the composition of boards of directors, the climate policy of companies in which the company holds a stake, and the protection of shareholders' interests.
For example, BlackRock writes in this publication that it does not support any bonus policy that is not related to the performance of the beneficiary or the company. In the document "Our 2021 Stewardship Expectations", BlackRock also requires all companies in its "expanded focus universe" to have a business plan that is consistent with limiting global warming to "well below 2 degrees Celsius" and with the net zero strategy for global greenhouse gas emissions by 2050.
BlackRock said it placed 191 board members under review with the announcement of voting against re-electing them, if they did not show noticeable progress in managing and reporting on climate-related risks by the end of 2021.
In October 2021, a report about BlackRock's voting behaviour caused quite a stir. The top asset manager now intends to give some of its clients the opportunity to vote at general meetings. BlackRock hereby responds to the following three points of critique: Firstly, to pension funds and other large investors who want direct voting rights. Secondly, to experts who fear that so-called index investing, as practised by BlackRock, will result in more companies falling under the control of fewer asset managers. And thirdly, to the critique that BlackRock has too little influence on the companies it invests in.
What does the voting data say?
The processed data we provide on BlackRock's proxy voting behaviour offers an opportunity to look at the asset manager's behaviour.
Does BlackRock adhere to its own guidelines? Is re-electing Glencore’s boards of directors in line with BlackRock's climate goals? Why did BlackRock not support Frederico F. Curado's candidacy for the board of Transocean Ltd. due to insufficient climate policies, but vote for former CEO Ivan Glasenberg to remain as the head of Glencore's board?
What does BlackRock do when companies fail to comply with their policies? What does it mean for their principles regarding bonus policy when BlackRock confirms the entire UBS board of directors even though executive compensation increased by 10 million in 2020? And is BlackRock's announcement that it will give its clients the right to vote in the future a step towards more democracy in business, or is BlackRock thereby dodging the obligations its market power entails?