Further to last week's post: "BlackRock's 2018 Engagement Priorities Continue Those Identified Last Year," BlackRock's newly-released "BlackRock Investment Stewardship’s approach to engagement on human capital management" explains what it means by - and the basis for its focus on - portfolio company human capital management (HCM) practices, and its plans for engagement. Particularly helpful from the standpoint of companies' preparation are the lists of HCM-related topics BlackRock may address with boards and management in the course of its engagement on this issue:
When engaging boards on HCM we are likely to discuss:
- Oversight of policies meant to protect employees (e.g., whistleblowing, codes of conduct, EEO policies) and the level of reporting the board receives from management to assess their implementation
- Process to oversee that the many components of a company’s HCM strategy align themselves to create a healthy culture and prevent unwanted behaviors
- Reporting to the board on the integration of HCM risks into risk management processes
- Current board and employee composition as it relates to diversity
- Consideration of linking HCM performance to executive compensation to promote board accountability
- Board member visits to establishments or factories to independently assess the culture and operations of the company
When engaging management teams, the topics we may cover include:
- Policies to encourage employee engagement outcomes and key drivers (e.g., wellness programs, support of employee networks, training and development programs, and stock participation programs)
- Process for ensuring employee health and safety and complying with occupational health and safety policies
- Voluntary and involuntary turnover on various dimensions (e.g., seniority of roles, tenure, gender, and ethnicity)
- Statistics on gender and other diversity characteristics as well as promotion rates for and compensation gaps across different employee demographics
- Programs to engage organized labor and their representatives, where relevant
- Systems to oversee matters related to the supply chain (including contingent workers, contractors and subcontractors)
Referencing the SASB industry-specific standards, BlackRock - which is a member of the SASB Investor Advisory Group - also encourages companies to provide better disclosure on their HCM-related practices that includes both qualitative and quantitative information.
Access additional information and resources on our Institutional Investors and Sustainability topical pages.