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On the heels of last week’s SEC proposal for enhanced proxy voting disclosure, yesterday BlackRock announced that it will give institutional index investors, such as pensions & endowments, the option to vote their own holdings – rather than having the asset manager cast votes on their behalf. This change will begin on January 1st and will apply to about 40% of BlackRock’s managed assets – a big expansion from the limited number of existing BlackRock clients who’ve been able to do this to-date.

BlackRock also said that this is just the beginning of a bigger initiative. Tulane Law prof Ann Lipton pointed out on Twitter that this could even be a step toward pass-through voting. Here are a couple of excerpts from the announcement:

Beginning in 2022, BlackRock is taking the first in a series of steps to expand the opportunity for clients to participate in proxy voting decisions where legally and operationally viable. To do this, BlackRock has been developing new technology and working with industry partners over the past several years to enable a significant expansion in proxy voting choices for more clients.

And:

BlackRock is committed to exploring all options to expand proxy voting choice to even more investors, including those invested in ETFs, index mutual funds and other products. This initiative will require the cooperation of additional partners across the investment and proxy voting ecosystem. In certain instances, it will also require regulatory and operational system change.

The asset manager says that it expects many clients will continue to want BlackRock Investment Stewardship to vote on their behalf, but it is making this option available because some clients want greater participation in proxy voting. Here are the ways that eligible investors will now be able to vote:

– Use their own proxy voting policies and transmit their votes using their own voting infrastructure.

– Choose from a menu of third-party proxy voting policies (e.g., sustainability policies, etc.) and have votes cast using BlackRock’s voting infrastructure.

– Vote directly on select resolutions or select companies using BlackRock’s voting infrastructure (This option is available only to clients in institutional separate accounts.)

– Continue to have BlackRock Investment Stewardship cast proxy votes using BlackRock’s voting policies and using its voting infrastructure.

– Liz Dunshee

Programming Note: Our office is closed on Monday, October 11th and we aren’t blogging that day. We’ll be back on Tuesday, October 12th.