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BlackRock wields immense power as the world's biggest asset manager. This power comes from its ability to vote underlying shares in the companies they own on behalf of investors. When investors buy into BLK funds, they give up most voting power.pic.twitter.com/OD9czvHzgi
With $8 trillion in assets, BlackRock has become the top shareholder of most S&P 500 companies. While individuals don't normally do the research to vote their shares or coordinate with others, BlackRock spends considerable time doing so.pic.twitter.com/r8X1KFK7BM
This is where BIS comes in. This group is in charge of developing & executing BlackRock's vision through voting on shareholder proposals & director appointments. Their 45 person team engages with thousands of companies around the globe.pic.twitter.com/3cpOG1hYjO
BIS became much more active as a voting power in 2020. Total engagements with company boards were +48% in 2020 and assets engaged grew to 61% of total. This implies BlackRock can still become much more active with investor assets down the road.pic.twitter.com/iGGwZpSfsG
BlackRock's voting record is increasingly conflicting with management as well. Over a third of all BLK's engagements were against management proposals, particularly in Europe and Latin America:pic.twitter.com/MJE2nY02bZ
BIS follows a defined process to determine how & when to engage companies. The first stage - research & issue spotting - is arguably the most important & the most opaque.pic.twitter.com/ZVCprx3Sq1
2021 is already looking to be a busy year for BIS - particularly on climate change & the E in ESG. BLK markets itself as a passive fund manager, but it seems pretty active to me...https://www.bloomberg.com/news/articles/2021-02-17/blackrock-s-latest-climate-instructions-come-with-a-new-threat …
BlackRock is ramping up shareholder activism primarily as a marketing tactic. Millennials feel better about putting their money with a manager who's fighting for the issues they care about. At least that's the story BlackRock will tell you.
BlackRock is ushering in an era of centralized voting power that we've never seen before on Wall Street. Do mom-and-pop investors know how their assets are being used to build influence? Should they have a voice?
Here's the link to BIS's full annual report - it's full of interesting & important insights. I recommend everyone give it a look: https://www.blackrock.com/corporate/literature/publication/blk-annual-stewardship-report-2020.pdf …pic.twitter.com/RSiWA4Zu9c
I'll be talking more about BlackRock's power and the incredible growth of ESG activism in this week's newsletter. Sign up below so you don't miss it:https://frontmonth.substack.com/
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