BlackRock, which has faced public pressure from Republicans over its commitment to social and environmental goals, announced Thursday it is expanding voting in proxy battles to some smaller investors, lessening its own power over corporate decisions.
The move comes a year after the firm, which is the world’s largest money manager, announced its “Voting Choice” initiative that enabled all U.S. public and private pension plans, in addition to endowments, insurance companies, and sovereign wealth funds, to engage in the proxy voting process.
The new announcement by BlackRock on Thursday will grant individual investors in select mutual funds in the United Kingdom the same ability, according to the firm, a pilot program that could be expanded. The Financial Times reported that the pilot program would begin next year.
In a letter to clients, BlackRock CEO Larry Fink said that engagement between companies and their owners is pillar of capitalism and that technology can enhance that engagement. He said that while many asset owners are fine with BlackRock’s stewardship team serving “as a bridge between them and the companies they are invested in,” others increasingly want to participate in the proxy voting process.
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“We can now use technology and innovation to enhance that engagement, broaden the touchpoints a company has with its owners, and bring more voices into our capitalist system,” Fink said. “This revolution in shareholder democracy will take years to be fully realized, but it is one that, if executed correctly, can strengthen the very foundations of capitalism.”
Under the current Voting Choice initiative, institutional investors holding nearly $2 trillion in assets can engage in proxy voting, with the owners of some $450 billion already taking advantage of the opportunity.
“It’s clear there are investors who don’t want to sit on the sidelines. They have a view on corporate governance, and they want a meaningful way to express those views,” Fink said.
The move to push more “shareholder democracy” comes as BlackRock faces scrutiny and divestment from Republican statewide officials, including attorneys general and treasurers, over its environmental, social, and governance push.
Missouri was the latest state to launch a broadside against BlackRock. Last month, Missouri State Treasurer Scott Fitzpatrick announced that the state is pulling some $500 million in pension funds from the firm. Fitzpatrick accused BlackRock of prioritizing a “woke political agenda” over delivering shareholder value. He asserted the action was taken to prevent Missourians’ tax dollars from “being weaponized against them.”
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South Carolina’s state treasurer also confirmed to the Washington Examiner last month that it will be divesting all its BlackRock holdings. Louisiana additionally announced that the state had divested $560 million, which will increase to $794 million over the coming months.
Amid the barrage of divestments, BlackRock launched a webpage committed to “setting the record straight” about how it handles investment decisions, disclosure, and ESG. The firm claims its views on climate risk aren’t unique, and its new webpage noted that an overwhelming majority of companies in the S&P 500 publish sustainability reports.
