December 20, 2022

BlackRock’s ’23 Voting Guidelines: No Major Changes

Yesterday, BlackRock Investment Stewardship issued its 2023 proxy voting guidelines – along with updated Global Principles that outline the 7 key governance themes that the asset manager focuses on. Thanks to the Aon team for being so on top of things and letting me know!

Everything is effective January 1st. This 6-page summary ties together the voting guidelines & Global Principles. BlackRock’s policy summary makes sure to note that it’s a long-term corporate partner (emphasis added):

Consistent with BlackRock’s fiduciary duty as an asset manager, BlackRock Investment Stewardship’s (BIS) purpose is to support companies in their efforts to deliver long-term durable financial returns on behalf of our clients, the asset owners. BIS serves as an important link between our clients and the companies they invest in. We aim to build constructive relationships with companies, engaging in dialogue with company leadership throughout and over the years. As has long been the case, we focus on effective corporate governance and management of material sustainability-related risks and opportunities, which in our experience supports company resilience and long-term financial performance.

The summary also says that BlackRock won’t support shareholder proposals that it believes would result in “over-reaching into the basic business decisions of the company” – which tracks with its voting record this past season. BlackRock’s express nod to corporate support comes right as certain big asset managers are facing accusations that they’re too “woke”. It strikes a similar tone to a memo that State Street Global Advisors published a couple months back.

BlackRock also clarifies in the updated voting guidelines that it is only voting proxies for clients that have given it the authority to do so, in light of its new “voting choice” programs. And, it dials down some of the “ESG” terminology and references in the voting guidelines – e.g., in the section on “oversight role of the board,” the guidelines now refer to consideration of “material risk factors (including, where relevant, sustainability factors)” – rather than focusing on “material ESG risk factors.” BlackRock continues to see engagement with & election of directors as one of its most important responsibilities.

The bottom line when it comes to the voting policies, though, is that not much has changed. There are some wording changes that likely reflect what is already happening in practice. BlackRock says:

Consistent with our long-term approach, the changes made to our stewardship policies for 2023 build on our approach in prior years. We do not anticipate material changes in our voting as a result, and much of our engagement with companies will be continuing the dialogue on material risks and opportunities that we had in 2022.

As far as how all these different documents fit together, the voting guidelines explain how BIS’s Global Principles inform voting decisions on specific ballot items at shareholder meetings. Remember that BlackRock always applies its guidelines on a case-by-case basis, which the Principles make sure to note:

The issue-specific Guidelines published for each region/country in which we vote are intended to summarize BlackRock’s general philosophy and approach to issues that may commonly arise in the proxy voting context in each market where we invest. The Guidelines are not intended to be exhaustive. BIS applies the Guidelines on a case-by-case basis, in the context of the individual circumstances of each company and the specific issue under review. As such, the Guidelines do not indicate how BIS will vote in every instance. Rather, they reflect our view about corporate governance issues generally, and provide insight into how we typically approach issues that commonly arise on corporate ballots.

Just like it’s done for the past several years, the Investment Stewardship team plans to issue engagement priorities & thematic commentaries during Q1, which will give more info about what to expect during engagements.

Liz Dunshee