|
BlackRock will ask investors to chose
among policies ranging from voting with management to
prioritising Catholic values or environmental, social and
governance factors © Bloomberg
|
Brooke
Masters
in
New
York
JULY 17 2023
BlackRock will
give retail
investors in
its biggest
exchange traded
fund the
chance to
participate in proxy voting in 2024, as the $9.4tn asset
manager moves to rebut Republican claims that it pursues a “woke
agenda”.
The world’s biggest money manager has joined fellow index fund
providers State Street and Vanguard in experimenting with ways to
involve ordinary investors in voting on shareholder proposals
at a
time when
their collective
influence on
US companies
has come
under fire
from both left and right.
Investors in BlackRock’s iShares Core S&P 500
ETF
will be asked to choose among seven
different general policies ranging from voting generally with
management to prioritising Catholic values or environmental, social
and governance factors. Investors can also tell BlackRock
to continue
voting their
shares. Customers
will not
be able
to cast
specific votes
on individual companies.
The fund, known as IVV, has more than $342bn in assets, making this
the largest retail proxy voting effort to date. Charles Schwab started
polling retail investors in three funds last year, Vanguard
ran a
pilot project
involving three
funds this
spring and
State Street
launched a
larger programme in April.
Republican politicians
at the
state and
federal level
have accused
big fund
managers of
putting social and environmental goals ahead of investors’
financial returns, which they all deny.
Progressive social activists, meanwhile, are angry that the money
managers have been supporting
a smaller
share of
shareholder
proposals on
climate issues
than they
did in
2021. The fund
managers contend
that the
proposals have
become too
prescriptive
and
are not
in investors’
interest.
Both sides
contend that
the big
providers have
too much
power because
they hold
as much
as 20 per cent of
the shares of many US companies.
BlackRock
and
the other
asset managers
argue that
they simply
provide what
their clients
want, whether it
is ESG-influenced
investing or
a pure
focus on
profits. Pushing
the decisions
on proxy voting
down to clients helps make that claim more credible. It also could
take some of the heat off on particular votes, because the shares will
no longer be voted as a single bloc.
BlackRock already
gives institutional
customers
controlling $2.1tn
in index
assets the
option of choosing
how their
shares are
voted, and
$555bn had
done so
by the
end of
March. In
the retail pilot,
IVV’s holdings
will be
voted in
proportion to
the share
of investors
who select
each
policy.
“BlackRock is committed to a future where every investor can have the
choice to participate in the
shareholder voting
process,” said
Joud Abdel
Majeid, global
head of
investment
stewardship.
The money
manager is
also working
on a
UK programme
that will
allow retail
asset owners
to vote, but it has not yet been rolled out to customers.
Vanguard’s
pilot, which
concluded last
month, gave
retail investors
in three
of its
funds the chance
to chose
among four
different options
— vote
with management,
abstain, ESG
or let Vanguard
choose. It said in a statement: “We plan to build on the success of
our pilot by expanding it for next proxy season so we can further test
and validate our approach.”
State Street’s programme, which allows investors to chose among seven
options ranging from pro-labour
to pro-management,
aims to
include 82
per cent
of all
of its
eligible equity
assets by the end of
the year. It is starting with 57 index ETFs and mutual funds. Its
flagship S&P 500 fund,
SPY, the
world’s largest
with $431bn
in assets,
is not
eligible because
of rules
surrounding its structure as a unit trust.
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