Proxy voting made available to more investors
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The world's largest asset manager is rolling out greater proxy voting choice for its clients, making about 40% of the $4.8tn index equity assets it manages - including for 7m UK pension savers in pooled funds - eligible for expanded voting.
Beginning in 2022, institutional clients holding passive equities with the manager will be able to choose a proxy voting option that aligns best with their policies, asset manager BlackRock has said. The option will be available globally for institutional separate accounts, and for some pooled funds in the US and UK.
BlackRock has said it wants to explore how to expand these capabilities to investors holding ETFs, index mutual funds and other products.
Is shareholder voting improving?
The move comes as pressure is mounting on managers to allow for more tailored shareholder voting that is aligned with asset owners' policies.
In February this year, Willis Towers Watson's institutional platform the Asset Management Exchange and asset manager DWS, working in partnership with Northern Trust and Minerva Analytics, created a tool that aggregates investor stewardship preferences in pooled funds and seeks to execute votes in alignment with their expressions of wish.
Last month, the Taskforce for Pension Scheme Voting Implementation, set up by the government, reported back saying all asset managers should offer investors the opportunity to set an ‘expression of wish’.
What are the new voting options?
Investors with BlackRock now have four different options, three of them offering some independence from the manager's own voting policies:
- Owning the proxy voting: The investor votes proxies according to its own policy and transmits votes using its own voting infrastructure.
- Choosing third-party proxy voting policies: The investor selects from a menu of third-party proxy voting policies, and votes are cast according to the selected policy using BlackRock’s voting infrastructure.
- Voting directly on select resolutions or companies: Investors with segregated mandates can direct votes on individual resolutions or companies of their choice using BlackRock’s voting infrastructure.
- Continuing to use BlackRock Investment Stewardship: BIS votes proxies on behalf of client, according to BlackRock’s voting policy using BlackRock’s voting infrastructure.
The options will cover assets for more than 60m people globally. Of the $4.8tn, $750bn of pooled fund assets are eligible for the expanded voting options. The change includes assets of 7m UK pension savers who are invested in pooled funds.
Clients hope the move will spur others into action
The move has been welcomed by some of BlackRock's key clients. Maria Nazarova-Doyle, head of pension investments and responsible investing at provider Scottish Widows, which uses BlackRock funds, said, her firm is looking forward to exploring the proposition with BlackRock ahead of next proxy season.
"They have developed an exciting capability, and our hope is that today’s news will act as a catalyst for others in our industry to consider how they can more directly facilitate participation in proxy voting,” she added.
The US-based Washington State Investment Board is also positive about the manager's expanded proxy voting. Chris Phillips, director of institutional relations and public affairs, said asset stewardship and the ability to ensure responsible alignment between the proxy voting practices of asset owner and asset manager are a vital part of fiduciary responsibility.
"This sort of technological and operational advancement is helping us implement responsible voting practices and fits with the industry trend toward essential customization of investors’ assets stewardship needs. All of this will help to create alignment with our corporate governance priorities and outcomes,” Phillips said.
The announcement is also being hailed as an important a step forward by the Association of Member Nominated Trustees. Co-chair Janice Turner said: "This is a major milestone in stewardship for institutional investors. AMNT has been campaigning for nearly a decade for pension schemes investing in pooled funds to be able to have a voting policy that is respected by their fund managers. Today's announcement is a game changer and we congratulate Blackrock on making that move."
Turner added that now it has been shown by BlackRock and DWS that voting in pooled funds is possible, "we call on the rest of the fund management industry to follow their lead".
"This sort of technological and operational advancement is helping us implement responsible voting practices and fits with the industry trend toward essential customization of investors’ assets stewardship needs. All of this will help to create alignment with our corporate governance priorities and outcomes,” Phillips said.
The announcement is also being hailed as an important a step forward by the Association of Member Nominated Trustees. Co-chair Janice Turner said: "This is a major milestone in stewardship for institutional investors. AMNT has been campaigning for nearly a decade for pension schemes investing in pooled funds to be able to have a voting policy that is respected by their fund managers. Today's announcement is a game changer and we congratulate Blackrock on making that move."
Turner added that now it has been shown by BlackRock and DWS that voting in pooled funds is possible, "we call on the rest of the fund management industry to follow their lead".
