Acting in Our Clients' Best Interests
As a fiduciary asset manager, we have a duty to act in our clients' best interests. This includes protecting and enhancing the value of our clients’ assets—that is, the companies in which we invest on their behalf—by promoting good corporate governance.
Corporate Governance and Responsible Investment
BlackRock's responsible investment efforts are coordinated by the Corporate Governance and Responsible Investment (CGRI) team, which is based in five key regions—the United States, Europe, Japan, Hong Kong and Australia. Our regional teams evaluate and engage with companies on environmental, social, and corporate governance issues (ESG) within their local markets on behalf of BlackRock's clients globally. We use our own proprietary methodology along with third-party research from several leading external resources to critically assess the ESG performance and risk exposure of our portfolio companies.
Engagement and Proxy Voting
Engagement—direct communication with a portfolio company—is a fundamental part of BlackRock's responsible investment effort. We believe the key to engagement is constructive and private communication. Engagement lets us share our philosophy and approach to investment and corporate governance with portfolio companies and enhance their understanding of our objectives. Equally, we believe it gives us an opportunity to improve our understanding of investee companies and their governance structures and to better inform our voting and investment decisions.
We engage in a constructive manner—our aim is to build mutual understanding, not to tell companies what to do. We meet with executives and board directors; we communicate with the company’s advisors; and we engage with other shareholders where appropriate.
Another of our most important roles as a fiduciary is to vote, on behalf of our clients, at company annual general meetings and special meetings. Voting is the most broad-based form of engagement we have with companies. It enables investors to provide feedback to the board while encouraging board and management teams to consider and address investor concerns. We will vote against a company's proposals if engagement fails to resolve our concerns.
ESG Investment Integration
We actively seek to integrate environmental, social and corporate governance issues into our investment process. We believe that ESG factors are often a signal of management quality, particularly over the long term. The CGRI team partners closely with colleagues in BlackRock portfolio management to help raise awareness of potential risks, such as exposure to companies that are more likely to face litigation or reputational harm as a result of poor management of the impact of their operations on the environment or society.
Additionally, as a leader in the rapidly evolving field of responsible investing, BlackRock offers a variety of impact investment products that specifically address social, ethical and environmental (SEE) concerns.
For the most complete description of BlackRock's responsible investment philosophy and activities, please see our report, 2013 Corporate Governance and Responsible Investment at BlackRock.
* As of December 31, 2013.