by Adam O. Emmerich, David A. Katz, Karessa L. Cain, Elina Tetelbaum, and Carmen X. W. Lu
Left to right: Adam O. Emmerich, David A. Katz, Karessa L. Cain, Elina Tetelbaum and Carmen X. W. Lu. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)
In recent years, one of the most significant developments in corporate governance has been the adoption and expansion of voting choice programs by the largest institutional investors. Such changes have come in response to growing scrutiny and pressure from asset owners and regulators with diametrically opposed and fervently held views on the role of environmental and social issues such as climate change and diversity, equity and inclusion (DEI) in investment decisions. In furtherance of this trend, BlackRock has now adopted separate voting guidelines tailored towards specific funds and investors.
Early this month, BlackRock released climate and decarbonization stewardship guidelines for its funds with explicit decarbonization or climate-related investment objectives or other funds where clients have instructed BlackRock to apply these guidelines to their holdings. These new guidelines will supplement BlackRock’s benchmark policies applicable to all assets under management and will focus attention on how companies have aligned their business model and strategies to meet the goals of the Paris Agreement. A total of 83 funds with $150 billion of combined assets are expected to be covered by the new guidelines. BlackRock has indicated that it will apply the guidelines to those companies held by covered funds and clients who have opted into the guidelines and that produce goods and services that “contribute to real world decarbonization,” have a “carbon intensive business model” or face “outsized impacts from the low carbon transition,” based on their Scopes 1, 2, and 3 greenhouse gas emissions.
