Updates from BlackRock Inc
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BlackRock intends to push companies to step up their efforts to protect the environment from deforestation, loss of biodiversity and pollution of oceans and freshwater resources.
In guidelines released Thursday, the world’s largest asset manager said he was prepared to vote against re-election of directors if companies failed to effectively manage or disclose the risks of depleting “natural capital” , the global stock of natural resources. It can also vote in favor of shareholder proposals highlighting the risks associated with natural capital.
Sandy Boss, global head of investment management at BlackRock, said the use of natural resources and the risks of climate change are deeply interconnected. “The world will not meet the goals of the Paris Agreement, let alone the aspiration to achieve net zero emissions by 2050, without reducing deforestation and accelerating protection and restoration efforts,” Boss said. .
More than half of the annual production generated in the global economy is moderately or heavily dependent on nature, according to the World Economic Forum. However, illegal deforestation and burning has spread to much of the Amazon, Africa and Southeast Asia.
In October, BlackRock backed a resolution by Procter & Gamble shareholders that called on the consumer goods producer to account for its efforts to reduce forest degradation from expanding palm oil production.
âWe expect companies to implement processes to identify, manage and mitigate negative impacts on the environment, and to provide solid information,â Boss said.
Larry Fink, the head of BlackRock, has become one of the industry’s most prominent supporters of sustainable investing. In letters sent annually to fellow CEOs, Fink urged business leaders to adopt more rigorous environmental, social and governance standards to improve shareholder returns.
Critics, however, argue that BlackRock has not used its immense influence effectively, especially when exercising its voting power on sensitive ESG issues.
Moira Birss, director of climate and finance for the Amazon Watch charity, said BlackRock’s words were “toothless” in the absence of meaningful consequences for companies that did not tackle environmental issues. âBlackRock should adopt a definitive no-deforestation and human rights policy with clear accountability mechanisms that translate into concrete improvements for communities, ecosystems and the planet,â said Birss.
BlackRock also plans to toughen its assessment of executive compensation, a topic expected to prove controversial at shareholder meetings this year due to job losses and widening inequalities created by the coronavirus pandemic.
Where climate change meets business, markets and politics. Check Out FT Coverage Here
BlackRock said Thursday it would ask boards of directors to explain how executive compensation is linked to the interests of stakeholders, including employees, vendors and the communities in which companies operate.
Concerns over executive compensation at Ocado, the UK’s online grocery provider, prompted BlackRock to vote last year against the re-election of three directors and the compensation report.
The pandemic has also led to complaints that workers in industries such as food processing and transportation have been exposed to higher infection risks that employers have ignored or dismissed.
The boss said BlackRock expects companies to take steps to mitigate risks to staff that could arise from their business practices.
BlackRock voted in January against re-election to the board of directors of Top Glove, the Malaysian-based rubber glove maker. A quarter of the company’s workforce has been infected with the coronavirus after some employees were forced to live and work in unsuitable premises.
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