• SRD II puts obligations on: EU companies with shares traded on EU regulated markets; EU life insurers and occupational pension schemes; EU asset managers; EU proxy advisors; and ‘intermediaries’ both in and outside the EU in so far as they provide services relating to EU listed shares.

• BlackRock’s Shareholder Rights Directive II – Engagement Policy is available in the Investment Stewardship

• BlackRock will continue to work with institutional investors to support them in meeting their obligations under SRD II.  BlackRock Investment Stewardship (BIS) publishes its engagement policy and discloses its engagement activity on its website
• BlackRock is committed to providing transparency into our investment stewardship activities. Learn more about how we are delivering on our commitment here.
• As a fiduciary investor on behalf of our clients, our obligations to our clients is of critical importance.  We aim to enhance our disclosures to clients to provide transparent information about the financial and non-financial performance of investee companies and how our investment strategies meet client needs.
• We will work with each institutional investor to ensure that they have the information they require to meet their obligations at the time required.

BlackRock makes available the following disclosures to help asset owners (institutional investors) evaluate how as an asset manager for your portfolio or the BlackRock funds you are invested in, we act in your best long-term interests.

• How BlackRock’s strategy and its implementation
• complies with the agreements entered into with the Institutional Investor and
• contributes to the medium to long term performance of the assets or the fund the Institutional Investor is invested in
• Whether and how BlackRock makes decisions by evaluating the medium to long-term performance of the investee company, including non-financial performance
• Reporting on the key material medium to long term risks associated with the investments
• Use of proxy advisors for engagement activities
• BlackRock policy on securities lending and how it is applied to fulfil engagement activities, particularly at the time of general meetings
• Conflicts of interests that arose in connection with engagement activities and how BlackRock dealt with them
• Portfolio composition, turnover and turnover costs

As a BlackRock client your periodic reports detail the composition of your portfolio.

The turnover of equities within a portfolio will vary in relation to the investment strategy.  The turnover of equities and other securities within your portfolio is detailed within your portfolio transaction reports included in the periodic reporting you receive from us.

The transaction costs associated with the turnover of financial instruments within your portfolio are provided in accordance with MiFID within the ex-post cost disclosure of your statements.

ESG integration is part of both our active investment process and index investment processes and oversight. BlackRock has a consistent framework for ESG integration that also permits a diversity of approaches across different investment teams and strategies. ESG considerations that are material will vary by client objectives, investment style, sector, and market trends. Depending on the nature of the strategy of the fund or segregated account, which influences the assessment and materiality of the following considerations, when making investment decisions, we consider long-term financial forecasts of investee companies. These are developed using a combination of both market (consensus) estimates and the views of portfolio managers as to how the financial performance of the company is likely to develop over time. For our public market strategies, we are continuously expanding access to high quality ESG data sources.  In addition to third party data, we have developed proprietary measurement tools to deepen our investors’ understanding of material ESG risks.

Fundamental investment teams meet with company leadership, project sponsors, and other entities, with the BlackRock Investment Stewardship team when appropriate, to support investment research, including of material sustainability issues. Systematic investors and index portfolio engineers rely on the BlackRock Investment Stewardship team to conduct engagements with portfolio companies to drive the implementation and oversight of best practices in material sustainability areas to support long-term financial performance.

In our index investments business, we work with index providers to expand and improve the universe of sustainable indexes, and our investment stewardship processes encourage the companies in which our clients are invested to manage and disclose material sustainability risks effectively.

All investment teams have an integration statement which explains to what degree ESG considerations are included in the investment process. Portfolio managers have access to ESG research, data and insights to inform investment decisions.  Sustainability issues can contribute to a company’s long-term financial performance, and so further incorporating these considerations into investment research, portfolio construction and portfolio review can help enhance long- term risk adjusted returns. See more on ESG integration here and BlackRock’s disclosure under the Sustainable Finance Disclosure Regulation regarding sustainability risk integration is available here.

Throughout the investment process a wide range of risks are considered by BlackRock.   Whilst the risks identified may not be exhaustive, fund offering documentation and segregated account client reporting further detail applicable material risks.

BlackRock Investment Stewardship’s activities are focused on gaining a thorough understanding of companies’ approach to material business issues and for providing feedback from the perspective of a long-term investor on their practices and disclosures. We believe that when companies focus on these issues they enhance their ability to maximize long-term shareholder value for our clients, the vast majority of whom are investing for long-term goals, such as retirement. BlackRock Investment Stewardship does this through engagement with boards and management of investee companies and, for those clients who have given us authority, through voting at shareholder meetings. In particular BlackRock Investment Stewardship  has a focus on board quality and effectiveness, climate and natural capital, strategy, purpose and financial resilience, incentives aligned with value creation and company impacts on people (more details here

Proxy research firms are a critical component in the proxy voting system, providing research and recommendations on proxy votes. Proxy research firms also provide voting infrastructure, and some provide consulting services to public companies. For example, to facilitate voting and record keeping of votes, BlackRock Investment Stewardship contracts with the proxy service provider Institutional Shareholder Services (ISS) and leverages its online proxy voting platform, ProxyExchange.

It is important to note that although proxy research firms provide important data and analysis, BlackRock Investment Stewardship does not rely solely on their information, nor do we follow any single proxy research firm’s voting recommendations.

In most markets, BlackRock Investment Stewardship subscribes to two research providers. We use several other inputs to support the BlackRock Investment Stewardship team in assessing a company’s approach to multiple ESG risks and opportunities, as well as to arrive to an informed voting decision on behalf of clients. A company’s disclosures, BlackRock Investment Stewardship’s record of past engagements and voting, and ESG insights shared across multiple teams at BlackRock are the primary tools to inform our voting decision on behalf of clients. Where BlackRock has been authorized by clients to vote proxies, BlackRock Investment Stewardship votes in accordance with our Global Principles and market-specific voting guidelines.

When so authorized, BlackRock acts as a securities lending agent on behalf of Funds. Securities lending is a well-regulated practice that contributes to capital market efficiency. It also enables funds to generate additional returns for a fund, while allowing fund providers to keep fund expenses lower.

With regard to the relationship between securities lending and proxy voting, BlackRock’s approach is informed by our fiduciary responsibility to act in our clients’ best interests. In most cases, BlackRock anticipates that the potential long-term value to a portfolio of voting shares would be less than the potential revenue the loan may provide the portfolio. However, in certain instances, BlackRock may determine, in its independent business judgment as a fiduciary, that the value of voting outweighs the securities lending revenue loss to clients and would therefore recall shares to be voted in those instances. The decision to recall securities on loan as part of BlackRock’s securities lending program in order to vote is based on an evaluation of various factors that include, but are not limited to, assessing potential securities lending revenue alongside the potential long-term value to clients of voting those securities (based on the information available at the time of recall consideration). BlackRock Investment Stewardship works with colleagues in the Securities Lending and Risk and Quantitative Analysis teams to evaluate the costs and benefits to clients of recalling shares on loan. More detail on our approach to this assessment can be found here:

Periodically, BlackRock reviews our process for determining whether to recall securities on loan in order to vote and may modify it as necessary.

BlackRock Investment Stewardship maintains policies and procedures that are designed to prevent undue influence on BlackRock’s proxy voting activity. Such influence might stem from any relationship between the investee company (or any shareholder proponent or dissident shareholder) and BlackRock, BlackRock’s affiliates, a BlackRock advised fund or its affiliate, or BlackRock employees.  In fulfilling our duty, there are a number of situations where BlackRock determines not to vote itself due to regulatory restrictions or a perceived or actual conflict of interest. In such cases, BlackRock uses an independent third party, referred to as an independent fiduciary, to instruct the votes on our clients’ holdings. We have also published best practices when using an independent fiduciary to cast proxy votes across the various circumstances where one may be needed. The list of companies for which BlackRock appoints an independent fiduciary is managed by BlackRock’s Legal and Compliance team.

Sustainalytics, a global leader in ESG and corporate governance research and ratings, has served (together with its predecessor firms) as BlackRock’s primary independent fiduciary for over a decade. BlackRock Investment Stewardship periodically reviews Sustainalytics’ performance and its suitability against the characteristics outlined in our statement on conflicts of interest and proxy voting best practices. Sustainalytics makes voting decisions based solely on BlackRock Investment Stewardship’s publicly available proxy voting guidelines, which aim to advance clients’ long-term economic interests, and information disclosed publicly by the relevant companies. Sustainalytics may engage with companies in its own name at its discretion to ask clarifying questions or in response to a company’s request for engagement on voting matters, though it is not authorized to engage with companies on BlackRock’s behalf or represent BlackRock’s views. BlackRock Investment Stewardship does not influence Sustainalytics’ voting determination and does not know their voting decision prior to Sustainalytics providing our proxy voting agent with vote instructions.

As detailed in our statement on conflicts of interest, BlackRock Investment Stewardship’s oversight process in relation to Sustainalytics’ role is to review annually the votes cast by it to ensure consistency with BlackRock Investment Stewardship’s published voting guidelines. We report the findings of the review to BlackRock’s Investment Stewardship Global Oversight Committee, a risk-focused committee comprised of senior representatives across BlackRock, including from various BlackRock investment teams. The Committee is responsible for confirming the reappointment of BlackRock’s independent fiduciary. The process also involves discussing with Sustainalytics any votes that seemed inconsistent with BlackRock Investment Stewardship’s guidelines and to explain any changes to voting guidelines planned for the following year.

For investors of BlackRock funds within the scope of SRD II the portfolio composition can be found within the annual reports in the Literature Section of the fund product page and summarised holdings within the fund fact sheet.

The portfolio turnover of equities within a portfolio will vary in relation to the investment strategy.  For your relevant fund investments, the Portfolio Turnover Rate of all securities within the fund can be found within the summary table.

The transaction costs associated with the turnover of all instruments within the relevant BlackRock fund produced in accordance with MiFID  is available within the ex-post cost disclosure of the European MiFID Template (EMT).

ESG integration is part of both our active investment process and index investment processes and oversight. BlackRock has a consistent framework for ESG integration that also permits a diversity of approaches across different investment teams and strategies. ESG considerations that are material will vary by client objectives, investment style, sector, and market trends. Depending on the nature of the strategy of the fund or segregated account, which influences the assessment and materiality of the following considerations, when making investment decisions, we consider long-term financial forecasts of investee companies. These are developed using a combination of both market (consensus) estimates and the views of portfolio managers as to how the financial performance of the company is likely to develop over time. For our public market strategies, we are continuously expanding access to high quality ESG data sources.  In addition to third party data, we have developed proprietary measurement tools to deepen our investors’ understanding of material ESG risks.

Fundamental investment teams meet with company leadership, project sponsors, and other entities, with the BlackRock Investment Stewardship team when appropriate, to support investment research, including of material sustainability issues. Systematic investors and index portfolio engineers rely on the BlackRock Investment Stewardship team to conduct engagements with portfolio companies to drive the implementation and oversight of best practices in material sustainability areas to support long-term financial performance.

In our index investments business, we work with index providers to expand and improve the universe of sustainable indexes, and our investment stewardship processes encourage the companies in which our clients are invested to manage and disclose material sustainability risks effectively.

All investment teams have an integration statement which explains to what degree ESG considerations are included in the investment process. Portfolio managers have access to ESG research, data and insights to inform investment decisions.  Sustainability issues can contribute to a company’s long-term financial performance, and so further incorporating these considerations into investment research, portfolio construction and portfolio review can help enhance long- term risk adjusted returns. See more on ESG integration here and BlackRock’s disclosure under the Sustainable Finance Disclosure Regulation regarding sustainability risk integration is available here.

Throughout the investment process a wide range of risks are considered by BlackRock. Whilst the risks identified may not be exhaustive, fund offering documentation and segregated account client reporting further detail applicable material risks.

BlackRock Investment Stewardship’s activities are focused on gaining a thorough understanding of companies’ approach to material business issues and for providing feedback from the perspective of a long-term investor on their practices and disclosures. We believe that when companies focus on these issues they enhance their ability to maximize long-term shareholder value for our clients, the vast majority of whom are investing for long-term goals, such as retirement. BlackRock Investment Stewardship does this through engagement with boards and management of investee companies and, for those clients who have given us authority, through voting at shareholder meetings. In particular BlackRock Investment Stewardship  has a focus on board quality and effectiveness, climate and natural capital, strategy, purpose and financial resilience, incentives aligned with value creation and company impacts on people (more details here).

Proxy research firms are a critical component in the proxy voting system, providing research and recommendations on proxy votes. Proxy research firms also provide voting infrastructure, and some provide consulting services to public companies. For example, to facilitate voting and record keeping of votes, BlackRock Investment Stewardship contracts with the proxy service provider Institutional Shareholder Services (ISS) and leverages its online proxy voting platform, ProxyExchange.

It is important to note that although proxy research firms provide important data and analysis, BlackRock Investment Stewardship does not rely solely on their information, nor do we follow any single proxy research firm’s voting recommendations.

In most markets, BlackRock Investment Stewardship subscribes to two research providers. We use several other inputs to support the BlackRock Investment Stewardship team in assessing a company’s approach to multiple ESG risks and opportunities, as well as to arrive to an informed voting decision on behalf of clients. A company’s disclosures, BlackRock Investment Stewardship’s record of past engagements and voting, and ESG insights shared across multiple teams at BlackRock are the primary tools to inform our voting decision on behalf of clients. Where BlackRock has been authorized by clients to vote proxies, BlackRock Investment Stewardship votes in accordance with our Global Principles and market-specific voting guidelines.

When so authorized, BlackRock acts as a securities lending agent on behalf of Funds. Securities lending is a well-regulated practice that contributes to capital market efficiency. It also enables funds to generate additional returns for a fund, while allowing fund providers to keep fund expenses lower.

With regard to the relationship between securities lending and proxy voting, BlackRock’s approach is informed by our fiduciary responsibility to act in our clients’ best interests. In most cases, BlackRock anticipates that the potential long-term value to a portfolio of voting shares would be less than the potential revenue the loan may provide the portfolio. However, in certain instances, BlackRock may determine, in its independent business judgment as a fiduciary, that the value of voting outweighs the securities lending revenue loss to clients and would therefore recall shares to be voted in those instances. The decision to recall securities on loan as part of BlackRock’s securities lending program in order to vote is based on an evaluation of various factors that include, but are not limited to, assessing potential securities lending revenue alongside the potential long-term value to clients of voting those securities (based on the information available at the time of recall consideration). BlackRock Investment Stewardship works with colleagues in the Securities Lending and Risk and Quantitative Analysis teams to evaluate the costs and benefits to clients of recalling shares on loan. More detail on our approach to this assessment can be found here:

Periodically, BlackRock reviews our process for determining whether to recall securities on loan in order to vote and may modify it as necessary.

BlackRock Investment Stewardship maintains policies and procedures that are designed to prevent undue influence on BlackRock’s proxy voting activity. Such influence might stem from any relationship between the investee company (or any shareholder proponent or dissident shareholder) and BlackRock, BlackRock’s affiliates, a BlackRock advised fund or its affiliate, or BlackRock employees.  In fulfilling our duty, there are a number of situations where BlackRock determines not to vote itself due to regulatory restrictions or a perceived or actual conflict of interest. In such cases, BlackRock uses an independent third party, referred to as an independent fiduciary, to instruct the votes on our clients’ holdings. We have also published best practices when using an independent fiduciary to cast proxy votes across the various circumstances where one may be needed. The list of companies for which BlackRock appoints an independent fiduciary is managed by BlackRock’s Legal and Compliance team.

Sustainalytics, a global leader in ESG and corporate governance research and ratings, has served (together with its predecessor firms) as BlackRock’s primary independent fiduciary for over a decade. BlackRock Investment Stewardship periodically reviews Sustainalytics’ performance and its suitability against the characteristics outlined in our statement on conflicts of interest and proxy voting best practices. Sustainalytics makes voting decisions based solely on BlackRock Investment Stewardship’s publicly available proxy voting guidelines, which aim to advance clients’ long-term economic interests, and information disclosed publicly by the relevant companies. Sustainalytics may engage with companies in its own name at its discretion to ask clarifying questions or in response to a company’s request for engagement on voting matters, though it is not authorized to engage with companies on BlackRock’s behalf or represent BlackRock’s views. BlackRock Investment Stewardship does not influence Sustainalytics’ voting determination and does not know their voting decision prior to Sustainalytics providing our proxy voting agent with vote instructions.

As detailed in our statement on conflicts of interest, BlackRock Investment Stewardship’s oversight process in relation to Sustainalytics’ role is to review annually the votes cast by it to ensure consistency with BlackRock Investment Stewardship’s published voting guidelines. We report the findings of the review to BlackRock’s Investment Stewardship Global Oversight Committee, a risk-focused committee comprised of senior representatives across BlackRock, including from various BlackRock investment teams. The Committee is responsible for confirming the reappointment of BlackRock’s independent fiduciary. The process also involves discussing with Sustainalytics any votes that seemed inconsistent with BlackRock Investment Stewardship’s guidelines and to explain any changes to voting guidelines planned for the following year.