The 2023 letter also places emphasis on BlackRock’s role as a fiduciary to clients who “have a wide range of investment objectives, preferences, time horizons, and risk tolerances.” Fink provides his perspective of “Choice never being more important to BlackRock than it is today based on their broader and more diverse set of clients” while further stating “in this environment the diversity of our offerings, our global perspective and insights, and our approach of always putting our clients’ preferences at the center of our work remain powerful competitive advantages.” Within the section of the letter entitled “Transforming proxy voting with greater client choice,” BlackRock places emphasis on efforts to continue to innovate in a variety of areas to expand choices made available to their clients. As minority shareholders, it’s not our place to be telling companies what to do.” While BlackRock further states that “Better data is essential” and cites “More than half of the companies in the S&P 500 now voluntarily report Scope 1 and Scope 2 emissions” with expectations that the number will continue to rise, Fink reminds us of his perspective that “it is for the governments to make policy and enact legislation, and not for companies, including asset managers, to be the environmental police.” That’s why BlackRock has been so vocal in recent years in advocating for disclosures and asking questions about how companies plan to navigate the energy transition. Our job is to think through and model different scenarios to understand implications for our clients’ portfolios. Government policy, technological innovation, and consumer preferences will ultimately determine the pace and scale of decarbonization. Proxy Voting Guidelines.īlackRock’s position regarding climate risk within its 2023 guidelines is to leave it “up to each company to define their own strategy”, which aligns with Fink’s perspective that is reemphasized in his 2023 letter stating “It is not the role of an asset manager like BlackRock to engineer a particular outcome in the economy, and we don’t know the ultimate path and timing of the transition. The topic of climate-risk management alongside guidance for disclosure of material sustainability-related risks and opportunities has continued in 2023 as a shared theme amongst larger institutional investors, as recently touched on by Georgeson pertaining to BlackRock’s 2023 U.S. The climate-related section of this year’s letter entitled “Helping clients navigate and invest in the global energy transition” provides some assurance of BlackRock’s expectations for companies and how they may wish to implement or revise strategies to assess, disclose, and act on material climate-related risks. The message for companies to improve such disclosures, alongside other initiatives such as stakeholder engagement and climate transition planning, was initially announced by BlackRock and other large institutional investors years ago, and previously covered by Georgeson as identified in Fink’s letter released in 2020. While this may lead to some confusion amongst corporate CEOs and executive team members who typically seek to gain further insights from the CEO letter, there is sufficient information within this year’s combined letter which places emphasis on BlackRock’s previously stated position to call upon portfolio companies to improve sustainability-related disclosures. While in the past he has written two letters each year - one on behalf of BlackRock clients to CEOs and the other to BlackRock shareholders, this year’s combined letter to investors and all other stakeholders may signal a subtle move away from providing targeted stewardship letters to CEOs going forward. Within this section of the letter, attention is given to clients which have a range of investment objectives and perspectives, in recognition of the importance of having “access to data to ensure that material sustainability risk factors that could impact long-term asset returns are incorporated into their investment decisions.” The letter reemphasizes BlackRock’s view of “climate risk as an investment risk,” citing risk-related scenarios such as natural disasters and their impacts to the market, while specifically focusing on the topic of transition to a low-carbon economy being top of mind for BlackRock clients. The recently released 2023 letter primarily shares his perspectives on topics related to the financial performance and strategy of BlackRock, however, does include a section containing ESG subject matter specific to climate change. Larry Fink, the Chairman and CEO of BlackRock, recently sent his annual letter, addressing it to all investors with an intention to serve as a shared message to all stakeholders.
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