ESG roundup: BlackRock flags expectations ‘refresh’ on social issues

first_imgAlthough the report touched on BlackRock’s thinking about social factors, it focussed on the investment stewardship team’s climate-related engagement and voting.It reported that in 2020, it took voting action against 22% of 244 companies that it identified as making insufficient progress integrating climate risk into their business models or disclosures, and put the remaining 191 companies on watch.Those that did not make significant progress risked voting against management next year from BlackRock, it said.The 244 companies are selected from a pool of companies in carbon-intensive sectors with significant combined market capitalisation and carbon dioxide emissions in their respective regions.Catherine Howarth, CEO of responsible investment campain group ShareAction, suggested that BlackRock putting 191 companies on watch was nothing to get excited about given that “in a range of cases this year, Blackrock rejected shareholder resolutions in order to vote with corporate management in opposing shareholder demands to tackle climate risk”.“The 191 ‘on watch’ companies have effectively been given a 12-month free pass during the most critical and narrow time window in history for mitigating climate risk,” she argued.Last month the manager of Norway’s sovereign wealth fund said that high-quality shareholder proposals had to be sifted from low-quality motions, which could be not relevant enough or too controlling.New centre to drive climate-aligned finance implementationRocky Mountain Institute (RMI), a clean energy non-profit organisation, has launched the Center for Climate-Aligned Finance in collaboration with Wells Fargo, Goldman Sachs, Bank of America and JPMorgan Chase.“Climate alignment is cementing itself as the gold standard for the financial sector, but we need to acknowledge the difficulty of putting the global economy on track to net zero on an urgent timeline”Paul Bodnar, chair of the new Center for Climate-Aligned FinanceThe aim is to work with the financial sector to develop solutions in partnership with corporates in carbon-intensive sectors to drive decarbonisation, as well as develop relevant metrics, tools and means for tracking progress toward the net-zero transition.“Climate alignment is cementing itself as the gold standard for the financial sector, but we need to acknowledge the difficulty of putting the global economy on track to net zero on an urgent timeline,” said Paul Bodnar, chair of the new hub and managing director at RMI. “The Center will shape how ambitious commitments can be effectively translated into lasting impact.”The centre is partnering with prominent non-profit organisations and platforms such as the Partnership for Carbon Accounting Financials, United Nations Environment Programme Finance Initiative, 2° Investing Initiative, and the Mission Possible Platform.SASB, GRI to collaborate for clarityThe Global Reporting Initiative and the Sustainability Accounting Standards Board have agreed a collaborative workplan to demonstrate how both sets of standards can be used together, and what the similarities and differences are in the information created from them.A spokeswoman for SASB explained that the collaboration also aimed to demonstrate how the two standards could set the basis for a globally accepted system for sustainability disclosure.“This new development fosters the complementary nature of SASB and GRI standards, and together we hope to help deliver the double materiality ambition of the EU’s Non-Financial Reporting Directive that is currently under review by the European Commission,” she added.Double materiality is a concept that considers environmental and social factors in terms of their potential impact on companies or investments but also companies’ or investments’ potential environmental or social impact.SASB’s industry-specific standards are more about the financial materiality perspective, while the GRI standards focus on environmental and social materiality – the economic, environmental and social impacts of a company and hence its contributions towards sustainable development.These impacts can become financially material over time.Looking for IPE’s latest magazine? Read the digital edition here. BlackRock has said it will be “refreshing [its] expectations for human capital management” in the second half of the year as it assesses the impact of companies’ response to the coronavirus pandemic and “associated issues” of racial equality.The asset manager also indicated it would be updating its expectations for how companies pursue business practices that support their licence to operate more broadly.“We will be increasingly disposed to vote against management as and when companies fail to appropriately balance the needs of stakeholders in the post-COVID-19 age,” it said. “We will also continue to emphasise the importance of racial, ethnic, and gender diversity in the board room.”BlackRock was commenting in the context of a report updating readers about its stewardship team’s approach to sustainability after the asset manager in January announced it was making sustainability central to its investment-related activity.last_img

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