- BlackRock extends voting rights to some large investors in some countries outside the US.
- The world’s largest wealth manager is under scrutiny for its far-reaching influence as a shareholder.
- BlackRock’s global ETF chief said he expects more investors to choose their own stocks over time.
BlackRock is giving a bigger megaphone in corporate boardrooms to more large investors like insurance companies and pension funds that invest in its products.
The move by the New York-based company, announced Monday, is another step taken by the world’s largest wealth manager amid criticism from some lawmakers for its influence as an institutional shareholder. Typically, money managers like BlackRock vote on shareholder proposals on behalf of the investors who bought their funds.
Last fall, BlackRock said it would give certain institutional clients the ability to self-vote on shareholder proposals beginning in January this year.
That means more large companies — themselves representing millions of end investors — will have the ability to vote on companies they invest in the way they want, rather than letting BlackRock vote on their behalf.
BlackRock says it’s now expanding that option to some large investors in Canada and Ireland, plus more in the UK, for the first time. Overall, clients representing 47% of BlackRock’s $4.9 trillion index equity assets around the world are now eligible to choose their own stocks. That’s up from 40% when BlackRock launched the program called BlackRock Voting Choice.
And BlackRock says investors have so far accepted the offer from the $9.6 trillion money manager. Clients, representing a quarter of eligible assets, say they choose to choose their own stocks, according to BlackRock.
The wide-ranging effort is overseen by senior executives including Chief Client Officer Mark McCombe, Sandy Boss, Global Head of Investment Stewardship, and Salim Ramji, who manages global exchange-traded funds and index investments.
Clients might have their own in-house expertise when considering how to use their voices or have a point of view on specific issues they want to express, Ramji told Insider. “It’s her money. You own the assets. If we can make it easier for them, they will,” he said.
“Maybe you have clients who appreciate that we take a long-term view of economic returns, but maybe you just have a different type of investment philosophy,” he said, adding that he expects more clients to choose it , to choose their own path time.
These moves, which allow investors to cast their own votes at shareholder meetings, reflect the asset management giant’s and its rivals’ intense scrutiny, most notably Vanguard and State Street, over their wide range of funds that own significant company names investors.
“By allowing more clients to choose their own proxies, BlackRock is anticipating any regulatory action that would come sooner or later,” said Hortense Bioy, Morningstar’s global director of sustainability research, in a report last October. “There is only as much concentration of power as politics can tolerate.”
BlackRock’s stewardship team, one of the largest on Wall Street, still claims a lot of power in terms of the say it has in the proxy voting universe.
Over the past year, BlackRock’s investment stewardship team, led by Boss, a former longtime partner at consulting firm McKinsey, has engaged with thousands of public companies in which it invests on behalf of investors.
BlackRock voted on approximately 164,000 proposals at approximately 13,600 companies in 2021, voting on issues such as executive pay, climate-related disclosures and company board appointments. BlackRock noted in a stewardship report that it broadly supports management teams. She voted last year to elect 90% of board members worldwide.
Other companies have taken steps to expand investor voting rights as a growing number of retail investors flocked to the market during the pandemic. Last year, popular brokerage app Robinhood acquired Say Technologies, a startup aimed at connecting investors with the companies they invest in to vote on their stocks and voice what they say about their investments to have.