As an exercise in corporate democracy it is impressive. BlackRock, the world’s largest fund manager, is expanding the “voting choice” measures that allow clients, such as pensions funds, to make their own decisions when it comes to voting at annual general meetings.

An announcement this week sees voting choice expanded to clients representing 47% of index equity assets globally, including 650 funds based in the US and UK. Funds valued at $530bn, or a quarter of eligible assets, have now shifted to their own voting, while half the assets ($4.7trn) managed by BlackRock are eligible to vote their own preferences.

Voting choice is available for 100% of US pension funds using BlackRock, and round 80% of assets managed in Europe and the UK.

According to Sandy Boss, global head of BlackRock investment stewardship, voting comes as a response to investor demand. “Our clients have a range of investment horizons, risk preferences and financial needs. We understand that some client are seeking increased customisation, including the opportunity to align their voting with their unique investment philosophies or their views.”

Current moves, however, which started in October 2021, may just be the start. Salim Ramji, global head of iShares and index investments at BlackRock, says: “While BlackRock’s Voting Choice program is an industry first, we see it as just a beginning. Our ambition is to make voting choice convenient and efficient for all investors, as we are working with policymakers and industry participants around the world to extend voting choice for our clients.”

Size and voting power

Voting choice, or preferences, has been a concern here in the UK too. Recommendation 20 of the Department for Work and Pensions (DWP) report on voting for pensions schemes calls on asset managers to allow pensions an “expression of wish”.

In December last year the DWP minister Guy Opperman wrote to 44 asset managers asking them to implement Recommendation 20. He said in a letter he saw “no reason why trustees should not be able to set an expression of wish if they want to do so”.

Fund managers, and in particular BlackRock, have faced complaints for some time about their sheer scale and voting power. When it was announced in October last year, the New York Times DealBook column wrote: “Allowing investors to vote their shares gives BlackRock some cover, especially when it comes to what has become its thorniest issue: its size. In recent years, BlackRock has been simultaneously criticized for having too much power and for not using it to push for more changes at companies in which it invests.”

But it wasn’t just size that mattered to some observers. Also of concern was the leadership of BlackRock CEO Larry Fink in pushing ESG measures. According to a piece on the Harvard Law School governance blog, his “outsize role” in ESG has made the fund manager a “a target for protests” from campaigners to push the organisation further.

That is unlikely to end soon. BlackRock wields too much power and many investors will continue to allow the fund manager to vote their shares. But the company can say it has played a part in allowing investors the chance to make their own voting decisions.