BlackRock is revolutionising the asset management engagement process by offering the opportunity for institutional investors in certain index strategies to vote directly with companies.
Effective 1 January 2022, institutional investors in some 40% of BlackRock’s $4.8trn equity index assets will be able to vote at shareholder meetings which could drive greater engagement and shareholder action.
The world largest asset manager's decision was made in response to increasing demand from clients for greater participation in proxy voting.
Engagement in index strategies such as ETFs is typically the role of asset managers rather than investors but this latest move represents a significant shift in the proxy voting process.
Investors will have the option to continue to use BlackRock Investment Stewardship (BIS) which has voted at over 17,000 shareholder meetings and held more than 3,600 engagements over the past 12 months, as at 30 June.
The four options for institutional investors are:
Own your proxy voting
Choose from a menu of third-party proxy voting policies
Vote directly on select resolutions or companies
Continue to use BIS
In a letter to clients, BlackRock said: “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...in the US and UK.
“This capability from BlackRock responds to a growing interest in investment stewardship from our clients. These options are designed to enable you to have a greater say in proxy voting.”
ETF investors sharpen focus on engagement issues
Maria Nazarova-Doyle, head of pension investments and responsible investing at Scottish Widows, added: “We have long been calling for asset owners to be able to have a say in the voting of their shares, so today’s announcement from BlackRock signals a welcome step change for the industry.”