BlackRock Investment Stewardship (BIS), a division of BlackRock, recently published its most updated Investment Stewardship Engagement Priorities report. BIS is responsible for engaging with the companies in which BlackRock invests to ensure that they are managing sustainability risks and opportunities in a way that will deliver long-term financial returns for its clients. In this report, BIS reflects the five themes on which Blackrock most frequently engages companies, where they are relevant, as these can be a source of material business risk or opportunity.
So, what are these 5 topics?
- Board quality and effectiveness.
- Strategy, purpose, and financial resilience.
- Incentives aligned with financial value creation.
- Climate and natural capital.
- Company impacts on people.
BIS’s engagement approach is focused on the long-term. They take a minority shareholder role and do not tell companies what to do. Instead, their role on behalf of their clients as long-term shareholders is to better understand how company leadership is managing risks and capitalizing on opportunities to help protect and enhance the financial interests of their investors. Engagement may also inform their voting decisions for those clients who have given them authority to vote on their behalf.
BIS also engages with members of the board’s nominating and/or governance committee to assess whether governance practices and board composition are appropriate given the business and the broader context in which the company operates. In their engagements, they discuss various governance topics, including board composition and independent leadership, board oversight of management’s strategy and approach to risk management, succession planning for key roles, and the board’s own nomination and evaluation processes.
BIS’s engagement priorities for 2023 are consistent with those from prior years. There are no material changes in their approach to these themes, and their engagement with companies will continue the dialogue on material risks and opportunities relevant to their business models and sectors that they had in 2022.
Many companies want to figure out what investors want from them in terms of ESG. Blackrock, the largest asset management in the world, is quite open about their priorities in this report. Naturally, other investors will have different priorities. But if you want to approach Blackrock, this report provides good insight into what you should be talking about when you discuss your sustainability agenda.
CEO, Miranda ESG
Contacts at Miranda Partners