BlackRock, the world’s largest investor, has attempted to put flesh on the bones of its CEO’s statement in January about the topics it expects to prioritise for engagement this year.
In a document posted on the company’s website, BlackRock offers insights on its thinking about human capital management, disclosure of climate risks, executive pay and corporate strategies that aim at the long term.
The updates follow a letter published by BlackRock’s chief executive Larry Fink in January, explaining the asset manager’s interest in seeing companies make a “positive contribution to society”.
The report says that “diverse boards maker better decisions”, and warns companies that a lack of progress on diversity will cause the company to “hold nominating and/or governance committees accountable for an apparent lack of commitment to board effectiveness.”
On climate change, BlackRock says that it expects “the whole board to have a demonstrable fluency in how climate risk affects the business and management’s approach to adapting the long-term strategy and mitigating risk.”
Regarding pay, BlackRock describes how it will be looking for boards to put in place executive pay metrics that are “closely linked to the company’s long-term strategy and goals.”
In a separate paper BlackRock explains how it will approach human capital management as a key engagement topic.
“Most companies BlackRock invest in on behalf of clients have, to varying degrees, articulated in their public disclosures that they are operating in a talent-constrained environment, or put more differently, are in a war for talent,” the paper says.
“It is therefore important to investors that companies explain as part of their corporate strategy how they establish themselves as the employer of choice for the workers on whom they depend.”