BlackRock Responsibility

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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BlackRock, as a fiduciary investor, undertakes all investment stewardship engagements and proxy voting with the goal of protecting and enhancing the long-term value of our clients’ assets. In our experience, sustainable financial performance and value creation are enhanced by sound governance practices, including risk management oversight and board accountability.

BlackRock’s Investment Stewardship team engages with portfolio companies to encourage them to adopt corporate governance and business practices aligned with long-term financial performance. The team is positioned within the firm as an investment function and is comprised of professionals across all regions, taking a local approach with companies while benefiting from global insights. The team collaborates closely with the members of BlackRock’s 125 investment teams to ensure team members have a long-term value mindset and to share their perspective on governance practices. The team engages with companies in the same long-term frame, irrespective of whether a holding is in alpha-seeking, factor, or indexing strategies.

Engagement is not a single conversation. We have ongoing dialogue with companies to evaluate their business practices and explain our views over time. We initiate many of our engagements because companies have not provided sufficient information in their disclosures to fully inform our assessment of the quality of governance. We ask companies to review their reporting in light of their investors’ informational needs. In our view, companies that embrace corporate governance as a strategic objective – as opposed to a compliance function – are more likely to generate sustained financial returns over time.

However, when we do not see progress despite ongoing engagement, or companies are insufficiently responsive to our efforts to protect the long-term economic interests of our clients, we may signal our concern by voting against management.

Last year, our Investment Stewardship team had over 2,000 engagement meetings with companies. We expect to increase the number of companies we engage over time as the team grows and more companies seek feedback from BlackRock as a long-term shareholder.

We are committed to providing transparency into how we conduct investment stewardship activities in support of delivering long-term financial returns for our clients. Each year publish our engagement priorities around themes that we believe will encourage sound governance practices consistent with long-term financial performance. Our priority themes for 2019 are a continuation and evolution of those identified last year, comprising 1) Governance; 2) Corporate Strategy and Capital Allocation; 3) Compensation that Promotes Long-Termism; 4) Environmental Risks and Opportunities; and 5) Human Capital Management. Highlighting our priorities helps company boards and management prepare for engagement with us and provides clients with insight into how we are conducting stewardship activities on their behalf.

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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