BlackRock's Approach to Sustainability

"To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate."

— Larry Fink’s annual letter to CEOs, 2018

BlackRock’s purpose is to help more and more people achieve well-being through wealth. And as a fiduciary to our clients, we dedicate ourselves to protecting and growing the value of our clients’ assets.

From our perspective, business-relevant sustainability issues can contribute to a company’s long-term financial performance. Thus, further incorporating these considerations into our investment research, portfolio construction, and stewardship processes can enhance long-term risk adjusted returns for our clients.

In order to deliver the best outcomes to our clients, we are also focused on the sustainability of BlackRock’s performance over the long-term. This requires taking into account environmental, social and governance issues that have real and quantifiable impacts over the long-term for our firm, our people, and the communities in which we and our clients live and work.

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As a fiduciary to our clients, our firm is built to protect and grow the value of our clients’ assets. From BlackRock’s perspective, business-relevant sustainability issues can contribute to a company’s long-term financial performance, and thus further incorporating these considerations into the investment research, portfolio construction, and stewardship process can enhance long-term risk adjusted returns. By expanding access to data, insights and learning on material environmental, social, and governance (ESG) risks and opportunities in investment processes across our diverse platform, we become better overall investors.

Our activities to integrate sustainability considerations into the investment process mirror the diversity of clients we serve, as well as the range of investment strategies and asset classes we offer. Across BlackRock, we provide all of our investment teams with data and insights to keep them well informed of sustainability considerations. BlackRock has integrated issuer-level ESG data into our internal risk management system, Aladdin, which BlackRock investors use to make investment decisions and to monitor portfolios. As a result, BlackRock’s global investors have available to them ESG metrics that can inform the investment processes by identifying long-term risks and value drivers and enabling portfolio reporting and analytics. Armed with the necessary data and tools, our active portfolio managers are able to bring decision-useful ESG information into their investment processes, discounting or emphasizing this information as they would any other financial input. Our framework to incorporate sustainability-related information within BlackRock’s index strategies does not rely on active security-selection, however, as our index portfolio managers do not have the discretion to add or remove a company’s securities to their portfolio as long as that company remains in the relevant index. Therefore, in the context of our traditional index-investment mandates, our direct engagement with companies, including proxy voting, is the mechanism we use to integrate and advance material sustainability-related insights that we believe will enhance long term risk adjusted return. Our investment stewardship efforts benefit from firm-wide data and insights on sustainability-related issues, and our investment teams benefit from the sustainability insights derived from our stewardship activities – a powerful, positive feedback loop.

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We believe that companies with sound corporate governance practices, including how they manage the environmental and social aspects of their operations, better mitigate risk over the long term, and offer better risk-adjusted returns. We engage with companies held in index and active portfolios alike to encourage them to adopt the robust business practices consistent with sustainable long-term performance.

Our Investment Stewardship efforts, including our direct engagement and voting activities, encourage companies to deliver long-term, sustainable growth and returns for our clients. As a large investor, we are able – and feel a responsibility – to monitor the companies in which we invest and to engage with them constructively and privately where we believe that would help protect clients’ interests. As a fiduciary investor, BlackRock evaluates how companies manage the material sustainability-related risks and opportunities within their businesses. Engagement helps build mutual understanding on any issues where we are concerned that a company’s practices fall short of operational excellence. It also helps us assess a company’s approach to governance in the context of its specific circumstances.

Engagement is not a single conversation. We have ongoing private dialogue with companies to explain our views and how we evaluate their actions on relevant ESG issues over time. Where we have concerns that are not addressed by these conversations, we stand ready to vote against proposals from management or the board. Last year, our stewardship program engaged with about 1,600 companies to discuss their governance practices and the sustainability of their business model. We have committed to double the size of the Investment Stewardship team over the next three years, which will enable BlackRock to significantly increase its engagement activities and foster more effective engagement by building a framework for deeper, more frequent, and more productive conversations.

With an increased level of interest in our Investment Stewardship team’s work, we developed five key engagement priorities for 2017-2018 with the aim of providing more information to clients, companies and others on issues our team is focusing on and how we are engaging companies on these topics. Our engagement focus is on governance, corporate strategy, compensation, climate risk disclosure, and human capital.

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At BlackRock, we define sustainable investing as the combination of traditional investment approaches with ESG insights to mitigate risk and enhance long-term return. With this in mind, many of our clients turn to Blackrock for sustainable investment solutions. We believe sustainability-related issues – ranging from board composition to human capital management to climate change – have real financial impacts. We are passionate about providing our clients with a clear picture of the relationship between sustainability issues, risk and long-term financial performance. With this picture in focus, we deliver investment solutions that empower our clients to better meet their financial objectives.

BlackRock currently manages a broad suite of dedicated sustainable investment solutions, ranging from green bonds and renewable infrastructure to thematic strategies that allow clients to align their capital with the UN Sustainable Development Goals. BlackRock is the largest provider of sustainable ETFs, including the industry’s largest low-carbon ETF, and we manage one of the largest renewable power funds globally. With deep expertise in alpha-seeking and index strategies, across public equity and debt, private renewable power, commodities and real asset strategies, we are continuing to build scalable products and customized solutions across asset classes. We do not view this as an exercise in trading return for social outcomes. Instead, by identifying scalable, sustainable investment solutions that can enhance long-term returns, we can improve financial outcomes for our clients and accelerate the adoption of sustainable business practices globally.

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To deliver the best long-term outcomes for clients and shareholders, we must operate, and invest in, our business with a focus on the long-term. We do this through:

As an asset manager, the long-term sustainability of our firm is heavily dependent on our people.
Our corporate governance framework supports sustainable long-term value creation for our shareholders.
We support the long-term sustainability of our firm and the environment in which we and our clients live and operate.
Our principles and programs guide employees, officers and directors to conduct business in the highest ethical manner.
We believe a range of perspectives creates a richer employee culture and better outcomes for our diverse clients globally.
As a part of our fiduciary duty, we advocate for public policies that we believe are in our clients’ long-term interests.
BlackRock is committed to providing a safe and healthy working environment for all employees within and beyond our office space.

Philanthropy

Financial security and opportunity
We believe that financial security is key to long-term wellbeing, but for millions around the world it remains out of reach.
Practicing our values
We care about giving back in places where we work and live and offer our employees multiple engagement programs.

Awards and mentions

  • Human Rights Campaign: Corporate Equality Index: Perfect score, 2013-2018
  • Pensions & Investments Best Places to Work in Money Management, 2014-2017
  • LinkedIn Top Companies 2016-17
  • eFinancial Careers, #1 Ideal Employer in Asset Management, 2017-2018
  • Best Places to Work 2015 (Financial Times and Glassdoor)
  • Glassdoor's Highest Rated CEOs, 2016-2017

 

Please refer to following web sites to read about the methodology for each award:
Human Rights Campaign: Corporate Equality Index: Perfect score, 2013-2018
Pensions & Investments Best Places to Work in Money Management, 2014-2017
LinkedIn Top Companies 2016-17
eFinancial Careers, #1 Ideal Employer in Asset Management, 2017-2018
Best Places to Work 2015 (Financial Times and Glassdoor)
Glassdoor's Highest Rated CEOs, 2016-2017