The London Borough of Hounslow Pension Fund has applied its own voting policy in a global index fund, making use of BlackRock’s Voting Choice functionality.
In October 2021 BlackRock introduced its 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.
The functionality was expanded in June 2022, and now enables clients invested in numerous funds to both use BlackRock’s asset management services and have their holdings voted according to their own voting policy or a third-party policy if they so choose.
Pensions & Investment Research Consultants (PIRC) has worked with BlackRock to apply the Hounslow Pension Fund’s voting policy in respect of its investment in ACS World Low Carbon Equity Tracker Fund.
It is the first Local Government Pension Scheme (LGPS) to have its holdings voted in a BlackRock pooled fund according to its own ESG voting policy.
BlackRock’s move to enable proxy voting choice in pooled funds represents a significant step forward for asset owners’ stewardship activity, and other asset managers are following suit. There are now a variety of options open to asset owners which provide investors with greater ability to exercise their voice.
PIRC believes that all managers, active or passive, should ultimately offer asset managers full pass-through voting, where the asset owners can apply their own policy directly. PIRC has campaigned for asset owners to be able to vote in pooled funds for over 25 years.
Alan MacDougall, managing director at PIRC, said but the interest in proxy voting choice is “growing rapidly” and the organisation is already in dialogue with other LGPS funds that are looking at how they can put their own policies into effect, with a range of different asset managers.
“With different motivations and duties across funds, the demand to be able to select a voting policy is very much on the up,” he added.
Patrick Kilgallen, head of pensions at Hounslow pension fund, said: “Our primary fiduciary duty is to protect and enhance the long-term returns for our beneficiaries, and we want to be active in pursuing this objective. But taking our own position on the use of voting rights has in the past been precluded by pooled index fund structures. So we are very pleased to finally be applying our own policy in our pooled holdings.”