How BlackRock connects the dots on ESG

How large is the stewardship team at BlackRock?

It’s about 45 individuals across the globe. We have three regions: Americas, EMEA and Asia-Pacific.

How long have you worked for the firm?

I joined right at the beginning of 2017. Which sectors do you focus on? I cover industrials and materials in the US and Canada. I cover approximately 800 companies in those sectors and am responsible for the engagement and proxy voting with those firms.

How does your work complement the work of the portfolio managers and analysts at BlackRock?

Broadly speaking, our team is responsible for engaging with the companies we’re investing in, to have an ongoing dialogue to understand how they incorporate ESG into their decisions, so we can make informed voting decisions on behalf of our clients. Our integration with other teams at BlackRock has historically been very organic.

We share information across a uniform platform that allows portfolio managers to see engagement notes and our views on companies based on our analysis. There’s been more effort since January to integrate more seamlessly with our portfolio managers, ever since our CEO Larry Fink released his statement to other CEOs saying that climate risk is investment risk, and we need consistent and comparable data.

There’s also been a concerted effort internally to make sure our communication flows freely and organically within the firm. It’s been a value-add for some portfolio managers to understand our view. Sometimes we talk to different people at the same company – portfolio managers talk to the CFO or the IRO, whereas my team talks to the general counsel, sustainability team, human resources officer or board members.

Bringing together the different conversations our teams might be having helps us understand how well these elements are integrated into a company strategy. For instance, is it housed with one person who has been trained to talk about sustainability or is it ingrained in the company and how it thinks about its future?

Do you work with your in-house corporate access team around shareholder engagement?

Yes – we put requests through a centralized team to really make the best use of a company’s time and identify where there are opportunities for BlackRock to bring investment professionals together more efficiently. We now have several examples across the firm where I have an ESG view of a company and a fundamental analyst may have a different view and we work together to build a fuller view of that company. It’s this idea of trying to understand a firm from a variety of perspectives and make the best investment decision with the information we have.

What are BlackRock’s engagement goals in 2020?

Over the last four years our engagement priorities have been roughly the same. We cover five broad ESG topics: board quality, environmental risks and opportunities, corporate strategy and capital allocation, compensation that promotes long-termism and human capital management. These priorities were stated in 2017 as the team was expanding and we were trying to provide more transparency about the type of conversations we were having with companies.

This is an extract from an article that appeared in the Fall 2020 issue of IR Magazine. To continue reading, click here to open the full digital edition of IR Magazine