Two BlackRock global equity funds used by numerous pension schemes did not vote on US companies for almost 10 years, from 2014 until 2023.
UK pension schemes invested in BlackRock’s Aquila Life MSCI World Fund and Aquila Life Global Developed Fundamental Weighted Index Fund include those of ConocoPhillips, Cambridge University and the National Union of Journalists. Many schemes invest via platforms such as Aegon, Mobius Life and Phoenix.
The oversight occurred because BlackRock was not sent voting papers by the two index-tracking funds’ custodian for US shares. The error was corrected within 24 hours in June 2023.
No other BlackRock funds were affected by the issue and no significant motions at any US company would have been different had the votes of the two funds been cast.
The Implementation Statements of several UK pension schemes note the oversight. For example, with regard to the Aquila Life MSCI World Fund, the Vascutek 2002 Pension Scheme report dated December 2023 notes: “BlackRock […] has confirmed that the issue related to votes not being made in relation to US securities, dating back to 2014. They have also confirmed that no significant votes were missed, and that the issue has not impacted the outcome of any vote (given the size of the positions held by the fund).”
A BlackRock spokesperson told IPE: “This issue came to the attention of BlackRock and the custodian for two funds in the Aquila range 18 months ago. At that time, we immediately notified affected clients, apologised and rectified the issue.”
It is not clear, however, when and whether all interested parties were made aware of the issue. Some pension schemes only found out this year, as did their investment consultants. Different schemes have different investment consultants acting between them and BlackRock.
One source of discovery was the Unite union, which has been trying to mobilise shareholders as part of a labour dispute it has with US-listed shipping company CK Hutchison.
“Unite’s interest has always been in getting justice from CK Hutchison for the four Port of Felixstowe workers who were wrongly sacked,” said Sarah Carpenter, executive head of operations at Unite.
“It is disappointing that BlackRock [was] unresponsive to our requests to engage on CK. It was also disappointing for Unite to then discover two BlackRock funds did not vote shares in US companies, including a number that have had resolutions on labour rights at their AGMs. This is likely to have affected a number of pension funds. We are not clear whether all affected pension funds even now know it happened.”
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