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E-MailMark McCombe is Chief Client Officer, Salim Ramji is Global Head of ETFs and Index Investments, and Sandy Boss is Global Head of Investment Stewardship at BlackRock, Inc. This post is based on their BlackRock memorandum.
Our view is the choices we make available to clients should also extend to proxy voting. We believe clients should, where possible, have more choices as to how they participate in voting their index holdings.
Beginning in 2022, BlackRock is taking the first in a series of steps to expand the opportunity for clients to participate in proxy voting decisions where legally and operationally viable. To do this, BlackRock has been developing new technology and working with industry partners over the past several years to enable a significant expansion in proxy voting choices for more clients.
Much like asset allocation and portfolio construction, where some clients take an active role while others outsource these decisions to us, more of our clients are interested in having a say in how their index holdings are voted. We want to provide choice to these clients while continuing to support those who have selected BlackRock’s industry-leading investment stewardship team to vote on their behalf.
These voting choice options will first be available to institutional clients invested in index strategies – within institutional separate accounts globally and certain pooled funds managed by BlackRock in the U.S. and UK. Approximately 40% of the $4.8 trillion index equity assets we manage [1] for our clients will be eligible for these new voting options.
While we are offering clients more choice in how their index holdings are voted, BlackRock Investment Stewardship (BIS), our independent investment stewardship team, remains central to BlackRock’s fiduciary approach. In seeking client feedback to develop this capability, we heard that many clients want BIS to continue voting on their behalf, while we also heard from clients interested in greater participation in proxy voting.
Since its inception two decades ago, BIS has grown to be one of the largest investment stewardship teams in the asset management industry. This reflects the importance we place on engaging with the boards and management of the companies that we invest in on behalf of clients, advocating for sound corporate governance and sustainable business models to support long-term financial returns. BIS is also an industry leader in providing transparency regarding our stewardship efforts. Learn more about BlackRock’s commitment to Investment Stewardship and find information on BIS policies, corporate engagement, and proxy votes.
BlackRock is committed to exploring all options to expand proxy voting choice to even more investors, including those invested in ETFs, index mutual funds and other products. This initiative will require the cooperation of additional partners across the investment and proxy voting ecosystem. In certain instances, it will also require regulatory and operational system change.
- ~40% of the $4.8T in our index equity assets are eligible for these new voting options [2]
- over 60 million people globally invest in retirement assets eligible for voting choice [3]
- $750 billion of pooled fund assets are eligible for these expanded voting options [4]
- 7 million UK pension savers are invested in our pooled funds, now eligible for voting [5]
BlackRock’s voting choice initiative supports Washington State Investment Board in achieving our financial and corporate governance goals. This technological and operational advancement is helping us create alignment between asset stewardship priorities and investment outcomes.
—Chris Phillips
Director, Institutional Relations and Public Affairs at Washington State Investment Board (WSIB)
Read the letter BlackRock sent to institutional clients invested in index strategies eligible for expanded proxy voting options:
Voting choice: Expanded proxy voting options for more of our institutional index equity clients
Dear Client,
BlackRock’s role as a fiduciary is the foundation of our business model and culture. Embracing the responsibility that comes with investing on your behalf, we have always sought to provide you with the broadest range of choice in the strategies, products and services we offer to help you achieve the outcomes you seek.
Consistent with that goal, we are pleased to introduce the first in a series of steps we are taking to expand the opportunity for clients like you to choose how you participate in proxy voting decisions.
Beginning January 1, 2022, BlackRock will be expanding the voting choice options available to you and other institutional clients invested in certain index strategies – within institutional separate accounts globally and certain pooled funds [6] managed by BlackRock in the U.S. and UK.
While offering clients more choice in how proxies are voted, BlackRock Investment Stewardship (BIS) remains central to BlackRock’s fiduciary approach. BlackRock continues to invest in our investment stewardship capabilities and has doubled the size of the team over the past four years. BIS has also set a new standard in the industry for transparency around both engagement and voting.
Voting choice options will include:
1) Own your proxy voting:
Client votes proxies according to their own policy and transmits their votes using their own voting infrastructure. [7]
2) Choose from a menu of third-party proxy voting policies:
Client selects from a menu of third-party proxy voting policies, and votes are cast according to the selected policy using BlackRock’s voting infrastructure.
3) Vote directly on select resolutions or companies:
Client can direct votes on individual resolutions or companies of their choice using BlackRock’s voting infrastructure. This is an option for clients in institutional separate accounts only.
4) Continue to use BlackRock Investment Stewardship (BIS):
BIS votes proxies on behalf of client, according to BlackRock’s voting policy using BlackRock’s voting infrastructure. To support informed vote decisions, in the 12 months to June 30, 2021, BIS held more than 3,600 engagements with more than 2,300 companies. BIS voted at more than 17,000 shareholder meetings, casting more than 165,000 votes on behalf of our clients in 71 voting markets.
These options are designed to enable you to have a greater say in proxy voting, if that is important to you. You can choose to opt-in on a rolling basis. If you do not choose to opt-in, BIS will continue to represent your long-term economic interests, casting proxy votes in line with BlackRock’s voting policy using BlackRock’s voting infrastructure.
This capability from BlackRock responds to a growing interest in investment stewardship from our clients. It also reflects broader industry dynamics, such as the impact of advancing technology on investing – and with it, the opportunity for more customized approaches to your investments and how you manage them.
We are pleased to provide you with options that we believe are the broadest available in the market today. Our ambition over time is to continue to develop new technologies and new capabilities to increase proxy voting choice across even more of our investment products.
BlackRock will continue working to stay ahead of your future needs. Your relationship manager will be pleased to discuss this initiative and the options available to you.
Sincerely,
Mark McCombe, Chief Client Officer
Salim Ramji, Global Head of ETFs and Index Investments
Sandy Boss, Global Head of Investment Stewardship
Endnotes
1As of June 30, 2021.(go back)
2BlackRock as of June 30, 2021.(go back)
3BlackRock as of December 31, 2020.(go back)
4BlackRock as of June 30, 2021.(go back)
5BlackRock as of June 30, 2021.(go back)
6Institutional separate account clients have the opportunity to vote eligible proxies in eligible markets for the companies in which they are invested. Investors in participating pooled funds who meet the eligibility criteria and who elect option 1 or 2 will have the opportunity to direct voting on eligible proxies in eligible markets for companies held by the funds. BlackRock will determine eligibility criteria under this program based upon, among other things, local market regulation and practice, cost considerations, operational risk and/or complexity, and financial considerations, including the decision to lend securities.(go back)
7Because BlackRock is a fiduciary with respect to the pooled funds, BlackRock must review any voting policy that will apply to votes in connection with the funds’ holdings to confirm that the policy is consistent with the fiduciary standards that apply to the funds.(go back)
