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PRI reporting framework 2017

You are in Direct - Listed Equity Active Ownership » Engagement » Overview


LEA 01. Description of approach to engagement

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate whether your organisation has a formal engagement policy.

01.2. Indicate what your engagement policy covers:

01.3. Attach or provide a URL to your engagement policy. [Optional]

01.4. Provide a brief overview of your organization’s approach to engagement

Engagement provides BlackRock with the opportunity to improve our understanding of portfolio companies and their governance structures, so that our voting decisions may be better informed. Engagement also allows us to share our philosophy and approach to investment and corporate governance with issuers to enhance their understanding of our objectives. There is a range of approaches we may take in engaging companies depending on the nature of the issue under consideration, the company and the market.

We engage with companies on ESG issues both in the course of regular face-to-face meetings and when we believe the issue is of sufficient materiality to require a meeting focused solely on ESG matters.  BlackRock’s responsible investment strategy is built on our long standing commitment to meeting client needs through a focus on in-depth research and maintaining dialogue with the companies in which we invest. BlackRock’s standing as a long-term, constructive investor means companies are generally interested to understand our perspective.  In our engagement we address all issues of relevance to company performance, including ESG issues.

01.5. Additional information [optional]

Every year, BlackRock’s specialist Investment Stewardship team of over 30 dedicated professionals engages with about 1,500 companies. Such meetings may also include active portfolio managers with a holding in the company or who are considering investing. It should be noted that BlackRock’s equity investments are predominantly in index strategies so we will be a significant investor in most listed companies in each market.  We engage to protect and enhance the long-term value of our clients’ investments.

We consider various inputs to inform our engagement process.

We take into account:

the significance of the issue and the actual or potential financial impact,

our ability to influence an improvement in business practices,

whether engagement would help inform our voting decision or follow-up engagements, and

management’s responsiveness to investor concerns historically.

To prioritize our engagement process, we consider:

our analysis of shareholder votes;

research by our fundamental investment teams;

< > social, and environmental research;

research by investment banks and external ESG specialists.

For each engagement, the Investment Stewardship team determines our objectives and how best to reach them. The materiality and immediacy of a given issue will generally determine the level of our engagement.  We also determine with whom we should seek to engage at the company.  For instance, on matters of clarification of an issue related to a vote we would most likely engage with management representatives – the General Counsel, Corporate Secretary or head of human resources.  Where we seek to understand a company’s approach to its environmental and social impacts we may seek to meet with the head of corporate sustainability or a representative of the strategy team.  Where we have concerns about the quality of management or of board oversight, we would seek to meet with the relevant board directors, with or without management present as appropriate.  

Our approach to engagement has long been one of having a private dialogue with companies, setting out our views and any concerns and discussing ways these could be addressed. As a long-term investor, often with sizable holdings, we believe it is important to engage in a discreet manner and to build relationships with companies that will enable us to influence change over time when necessary.  We have an escalation strategy such that in the first instance we will engage in private dialogue.  Where we have concerns about a company’s practices, we will set out our expectations in that conversation and leave the company time to consider our feedback, making clear that we will continue to support management in our voting near term as long as we have a strong sense that progress towards addressing our concerns is being made. 

Each year we identify certain priority topics for engagement, which may be our focus for several concurrent years.  Examples in 2016 include cyber security, board gender diversity in markets where there is no market-set target (e.g. US) and climate-related disclosure. 

LEA 02. Reasoning for interaction on ESG issues (Not Completed)