BlackRock Wants Companies to Hire More Diverse Board Members, Strive Toward Net Zero Climate Goal

BlackRock wants more diversity in company executive boards and is pushing portfolio companies to strive toward net-zero climate goals, according to a 2022 policy update released on Tuesday, even as the world’s biggest asset manager remains firmly invested in fossil fuels.

“We have engaged companies on board diversity for many years. That engagement informs our voting guidelines for 2022. For example, in the U.S., we believe boards should aspire to 30 percent diversity of membership and encourage companies to have at least two directors on their board who identify as female and at least one who identifies as a member of an underrepresented group,” said the corporate statement (pdf).

The New York-based investment company, managing assets all over the world to the tune of $9.46 trillion, has followed the steps of other big-name investors in persuading the companies in their portfolios to comply with progressive guidelines on climate change, hiring, and governance.

Earlier this month, Goldman Sachs Asset Management wanted companies in which it has invested to have boards with at least 10 percent female directors and one director from an under-represented group. If companies did not comply, Goldman Sachs would cast proxy votes against those nominated by the board. BlackRock has not specified whether it would take similar retaliatory actions.

Specific demographic data is now readily available upon which investment companies like BlackRock and Goldman Sachs base their policies, and this data collection, especially in the United States, is likely to keep on growing, according to a BlackRock spokesperson. Under-represented people can include people with disabilities, veterans, ethnic or racial minorities, and those who identify as LGBTQ.

The investment companies are citing rising expectations from shareholders, employees, and customers for the change in policies, although a business survey by advisory firm Brunswick Group showed an increasing number of American consumers want executives to stay out of social issues, and simply focus on their businesses.

The latest policy update says that BlackRock encourages “companies to demonstrate that their plans are resilient under likely decarbonization pathways, and the global aspiration to limit warming to 1.5°C.” However, CEO Larry Fink told a virtual audience at the MIT Golub Center for Finance and Policy’s eighth annual conference that he believes BlackRock must remain invested in coal. “Keep in mind, if a foundation or an insurance company or a pension fund says, ‘I’m not going to own any hydrocarbons,’ well, somebody else is, so you’re not changing the world,” he said.

According to activist groups Urgewald and Reclaim Finance, BlackRock has invested around $85 billion in coal-related assets. BlackRock operates in 38 countries with more than 16,000 employees. The company has faced criticism for its anti-competitive behavior and its broad investments in China.

Based on 2021 data (pdf) from Spencer Stuart, 47 percent (22 percent in 2020) of new independent directors in S&P 500 companies are black, Hispanic, Native American, Asian, or multiracial, compared to 21 percent for existing directors. Forty-three percent of all new directors were women, compared to 47 percent last year, and 30 percent existing female directors.

From The Epoch Times