New SEC guidance hits the Big 2, BlackRock and Vanguard

By Ross Kerber

February 26, 2025 2:34 PM EST

Feb 26 (Reuters) - New restrictions on U.S. asset managers' stewardship will fall mainly on industry leaders BlackRock and Vanguard, a new analysis shows.

The two firms together manage nearly $22 trillion, reflecting the success of their low-cost passive funds. But their size has brought criticism across the political spectrum and led to various new regulations.

On February 11, the U.S. Securities and Exchange Commission tightened guidance on reporting holdings for fund managers who pressure management on environmental, social or governance (ESG) issues. The guidance directs them to make a more complicated disclosure document known as a 13D filing, rather than the simple 13G.

Critics worry the changes will silence investors' voices by discouraging them from weighing in on questions ranging from climate change to board structure.

A review by Matt Moscardi, CEO of director analytics firm Free Float Analytics, found that in the fourth quarter BlackRock filed 13G disclosures for 2,363 of 4,529 publicly traded U.S. companies, and Vanguard filed 13Gs for 2,182 of them, signs of their giant influence across the economy.

After those two, the pace dropped far off, with Dimensional Fund Advisors in third place having filed just 390 of the forms in the same period.

Moscardi said the data underscores how the two firms have taken on a massive role and can easily influence corporate elections with their combined 10% or more of company shares.

It also means the new SEC guidance could have a big impact, even if it mainly affects just the two firms, by dampening enthusiasm to press for changes lest a company challenge their status as a 13G filer.

"My guess is that to not have companies challenge them, they have to take a softer touch," Moscardi said. The firms might ask about a topic but might not be able to press for changes such as annual board elections, even though their voting policies suggest that.

A big question, he said, is whether a company would petition the SEC to declare BlackRock or Vanguard an activist if either firm asks a board about a topic, gets a dismissive answer and then votes contrary to management's wishes.

"The companies are sitting in the drivers' seat on engagement," he said.

Neither BlackRock nor Vanguard commented for this article.

Both companies paused their stewardship meetings with portfolio companies while digesting the new guidance, although BlackRock said last week it has resumed the get-togethers. The New York firm also said "we are complying with the new requirements including by highlighting our role as a 'passive' investor at the start of each engagement."

Ropes & Gray attorney Marc Rotter said smaller asset managers also could still face challenges with the new guidance. It is too soon to tell how they might respond.

"I don't think the issue is limited to the largest asset managers. There's a greater number where the issues might be salient for a few positions, even if they're not filing a lot" of disclosures showing greater than 5% ownership, he said.

Reporting by Ross Kerber; Editing by David Gregorio

Ross Kerber Thomson Reuters

Ross Kerber is U.S. Sustainable Business Correspondent for Reuters News, a beat he created to cover investors’ growing concern for environmental, social and governance (ESG) issues, and the response from executives and policymakers. Ross joined Reuters in 2009 after a decade at The Boston Globe and has written extensively on topics including proxy voting by the largest asset managers, the corporate response to social movements like Black Lives Matter, and the backlash to ESG efforts by conservative politicians. He writes the weekly Reuters Sustainable Finance Newsletter....