BlackRock releases its Engagement Priorities for 2020
Increased focus this year on sustainability-related issues and relevant disclosures given their growing impact on long-term value creation
BLACKROCK released March 18 its Engagement Priorities for 2020 (the Priorities), outlining its roadmap for investment stewardship this year. The Priorities also further BlackRock’s commitment in January to make sustainability its new standard for investing.
Stewardship is an essential component of BlackRock’s fiduciary responsibility to clients, and the 2020 Priorities are the foundation for the firm’s engagement with thousands of companies annually.
These Priorities represent the five core areas where BlackRock Investment Stewardship (BIS) will focus as it seeks to enhance the long-term value of client assets.
For 2020, BIS articulated five priorities: board quality, environmental risks and opportunities, corporate strategy and capital allocation, compensation to promote long-termism and human capital management.
The 2020 Priorities are a continuation from 2019, with each Priority now including accompanying criteria for 2020 that aligns with BlackRock’s expectations for measurable disclosure and action toward creating long-term value for shareholders.
“In intensifying our stewardship efforts, BlackRock expects companies to improve how they disclose sustainability-related risks and to demonstrate a plan for and progress on managing material risks and opportunities,” says Michelle Edkins, global head of BlackRock Investment Stewardship.
For companies that BIS has engaged with on one or more of the Priorities, and which have not made progress, BIS will hold the longest-serving or most relevant director accountable.
“Where companies are making progress on these critical issues, we expect to support management and the board. However, given the groundwork laid over the past several years, we will hold directors accountable where we have concerns about lack of progress on managing material sustainability factors or inadequate disclosure on business relevant risks and opportunities,” Edkins adds.
In addition to engaging with public companies on the issues outlined in the Priorities, BIS is committed to greater transparency into its engagements and votes.
To accomplish this, BIS will map its engagement Priorities to specific United Nations Sustainable Development Goals, such as gender equality and clean and affordable energy, as it puts increased focus on sustainability-related issues and relevant disclosures given their growing impact on long-term value creation.
It will also disclose additional information to provide enhanced transparency about how BIS conducts investment stewardship activities in support of long-term sustainable performance for clients.
In January 2020, BlackRock joined Climate Action 100+, an investor-led corporate engagement initiative encouraging companies to improve climate risk disclosure and align their business strategies with the goals of the Paris Agreement.
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