The pandemic and extraordinary associated challenges companies are currently facing notwithstanding, BlackRock released its "Engagement Priorities for 2020" reflecting more stringent and rigid standard-setting and associated director accountability that will inform its votes against directors across a number of topics, as well as a continued sustainability focus. Each of the following engagement priorities is now tagged with Key Performance Indicators that reflect BlackRock's expectations of its portfolio companies and the voting consequences for failing to meet its expectations:
By way of example, as to HCM, if the company doesn't disclose the board’s role in overseeing the company’s human capital practices, including an explanation of the type of information reviewed and how frequently, BlackRock will vote against relevant board committee members or the most senior non-executive director. As to Corporate Strategy and Capital Allocation, if a company fails - within an "agreed timeframe" - to provide adequate disclosures about how sector-relevant sustainability risks and opportunities (e.g., SASB) are integrated into its business strategy and fails to progress on its business practices underlying those disclosures, BlackRock will vote against the most senior non-executive director.
See our prior reports: "BlackRock Details Sustainable Investment Vision" and "BlackRock to CEOs: Sustainability Takes Center Stage"; "Plague, shmague, as long as you have an independent board chair" from The Securities Edge; these memos from Sidley, Davis Polk, and Wachtell Lipton; and these articles from MarketWatch and US News. See also BlackRock's concurrently released engagement priorities mapped to the UN SDGs. Additional memos about the new priorities are being posted on our Institutional Investors page under BlackRock. This post first appeared in the weekly Society Alert!