BlackRock is introducing proxy voting choice for an expanded base of institutional pooled fund clients while also offering new voting choice options for global separate accounts that employ index strategies.

From next year, institutional investors in certain UK and US domiciled funds will be able to “own” their proxy voting, casting votes according to their own policy and using their own voting infrastructure.

Alternatively, they will have the option to choose from a menu of third-party proxy voting policies. Currently owning proxy voting is only available to a limited number of BlackRock’s institutional pooled fund clients.

Investors in global separate accounts, meanwhile, who already have the option of casting votes as they wish, will also be given the alternative options of choosing from a third-party menu of voting policies or voting directly on select resolutions or companies.

BlackRock said making the options available was “the first in a series of steps to expand the opportunity for clients to participate in proxy voting decisions” and that it had been developing new technology and working with industry partners over the past several years to be able to do so.

In a letter to the relevant clients, senior BlackRock staff said although the asset manager was offering more choice in how proxies were voted, its stewardship unit “remains central to BlackRock’s fiduciary approach”.

The asset manager said that in seeking client feedback to develop its new capability, it heard that many clients wanted BlackRock Investment Stewardship to continue voting on their behalf, while others were interested in greater participation in proxy voting.

Step-change’ hopes

In the UK, considerable work has been put into overcoming obstacles to pooled fund investors implementing their own voting policies, with a government-appointed pooled fund voting taskforce last month delivering its recommendations on this vexed issue.

Maria Nazarova-Doyle, head of pension investments and responsible investing at Scottish Widows, was a member of that taskforce.

“We have long been calling for asset owners to be able to have a say in the voting of their shares, so today’s announcement from BlackRock signals a welcome step change for the industry,” she said. “We are looking forward to exploring this innovative proposition with BlackRock ahead of next proxy season.

“They have developed an exciting capability, and our hope is that today’s news will act as a catalyst for others in our industry to consider how they can more directly facilitate participation in proxy voting.”

Earlier this year DWS and investment platform the Asset Management Exchange announced that they had developed an investment service that allows pension schemes to express their stewardship preferences in pooled funds. 

BlackRock also supplied a comment from Chris Phillips, director, institutional relations and public affairs at Washington State Investment Board, who said WSIB was working as part of BlackRock’s voting choice initiative ”so that we have the choice to seek the corporate governance outcomes that fit with our board’s priorities”.

He added: ”This sort of technological and operational advancement is helping us implement responsible voting practices and fits with the industry trend toward essential customisation of investors’ assets stewardship needs. All of this will help to create alignment with our corporate governance priorities and outcomes.”

BlackRock’s announcement coincided with a report from US-based campaign group Majority Action, according to which BlackRock, Vanguard, BNY Mellon, T. Rowe Price, Wellington, and JPMorgan Asset Management voted for more than 98% of management-sponsored directors at ”climate-critical S&P 500 companies” this proxy voting season.

Screen Shot 2021-10-07 at 16.03.49

Source: BlackRock

8Voting will be available within certain fund ranges for those securities that are legally and operationally able. At times, BlackRock may limit securities available for voting choice in our discretion (for reasons such as: considerations of cost, operational risk and/or complexity, local market regulation and practice, and financial considerations). Voting choice will initially be available only to investors in certain U.S. and UK domiciled pooled funds as well as global separate accounts that employ index strategies.
9Clients own their own proxy voting: while this is available to a limited number of institutional pooled fund clients today, voting choice will be offered at scale to an expanded client base beginning in 2022.

Looking for IPE’s latest magazine? Read the digital edition here.