BlackRock released its Engagement Priorities and updated commentaries for 2022, which – consistent with recent years - reflect a continued sustainability focus, as well as increasingly stringent standard-setting and associated director accountability that will inform its votes on directors across a number of topics. Each of the following engagement priorities is tagged with Key Performance Indicators (consisting of both disclosure and practice/process expectations) that will inform its engagement and voting decisions:
- Board quality and effectiveness (see updated commentary)
We believe there are certain fundamental elements of governance practice that are intrinsic globally to a company’s ability to create long-term value. One of these is a high caliber, effective board responsible for overseeing and advising management and accountable to shareholders.
- Strategy, purpose, and financial resilience (see updated commentary)
We do not seek to dictate a company’s strategy. We engage on long-term corporate strategy, purpose and financial resilience to understand how a company is aligning its business decision-making with its purpose and adjusting its strategy and/or capital allocation plans to address the risks and opportunities of its operations to ensure long-term value for its shareholders.
- Incentives aligned with value creation (see updated commentary)
Appropriate and transparent compensation policies are a focus in many of BIS’ engagements with companies we invest in on behalf of clients. We believe companies benefit from disclosing how they seek to ensure that compensation policies and outcomes are consistent with the economic interests of long-term shareholders.
BIS engages with companies to better understand their approach to, and oversight of, climate risk as well as the natural capital that underpins their company strategy. We view the efficient management of natural capital as core to a sustainable long-term corporate strategy and ask companies to help investors understand how they may be impacted by climate-related risks and opportunities.
In our experience, companies that build strong relationships with their stakeholders are more likely to meet their own strategic objectives. This is why we ask companies to disclose how they consider the interests of their workforce in business decision-making how they implement processes to identify, manage, and prevent adverse human rights impacts that could expose them to material risks.
We reported on BlackRock’s updated stewardship expectations and 2022 voting guidelines in December here.
See this Pensions & Investments article and additional resources on our Institutional Investors page.