Looking after our clients’ assets for the long term.

We focus on board composition, effectiveness and accountability as a top priority. In our experience, high standards of corporate governance are the foundations of board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management and diversity.

Key performance indicators

• BlackRock Investment Stewardship seeks to understand how effectively a board oversees and counsels management.
• We expect to have access to a non-executive, and preferably independent, director(s) who has been identified as being accessible to shareholders where appropriate.
• We will hold the most senior non-executive director, e.g. chairman or lead independent director, accountable for ensuring such a role is identified.

Sound practices in relation to the material environmental factors inherent to a company’s business model can be a signal of operational excellence and management quality. Environmental factors relevant to the long-term economic performance of companies are typically industry-specific, although in today’s dynamic business environment some, such as regulation and technological change, can have a broader impact. Corporate reporting should help investors and others understand the company’s approach to these factors and how risks are mitigated and opportunities realized.

Key performance indicators

• We expect companies with which we have already engaged on TCFD-aligned reporting to disclose sufficient detail across the four pillars of the TCFD framework and provide a timeframe within which the company will report fully in line with the eleven recommendations.
• We will hold members of the relevant committee, or the most senior non-executive director, accountable for inadequate disclosures and the business practices underlying them.

We expect boards to be fully engaged with management on the development and implementation of the company’s strategy. Companies should succinctly explain their long-term strategic goals, the milestones that demonstrate progress, and any obstacles anticipated or incurred. They should also explain how capital allocation decisions align with the company’s long-term strategy.

Key performance indicators

• As part of long-term strategy and capital allocation, companies should articulate publicly how sector relevant sustainability risks and opportunities, for instance those identified in the SASB framework, are integrated into business strategy.
• We will engage with companies to review our reporting expectations and encourage them to make the connection between long-term planning and business-relevant sustainability risks and opportunities.
• We will hold the most senior non-executive director accountable if, within an agreed timeframe, the company has not provided adequate disclosures and made progress on the business practices underlying them.

We expect executive pay policies to use performance measures that are closely linked to the company’s long-term strategy and goals to ensure executives are rewarded for delivering strong and sustainable returns over the long-term, as opposed to short-term hikes in share prices.

Key performance indicators

• We expect pay outcomes to be correlated with a business relevant long-term performance metric, e.g. 3-5 year total shareholder returns or returns on invested capital.
• We will hold compensation committee members accountable for pay outcomes.

In a talent constrained environment, we view a company’s approach to human capital management as a potential competitive advantage. We expect disclosure around a company’s approach to ensuring the adoption of the sound business practices likely to support an engaged and stable workforce.

Key performance indicators

• Given most companies identify their employees as their greatest asset, we expect boards to oversee human capital management strategies.
• Absent disclosure about the board’s role in overseeing the company’s human capital practices, including an explanation of the type of information reviewed and how frequently, we will hold members of the relevant committee, or the most senior non-executive director, accountable.