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Board diversity tops list of concerns for Blackrock Investment Stewardship

Asset manager voted against 975 companies globally for lack of diversity at board level

Blackrock Investment Stewardship (BIS) has voted against 255 directors and 319 companies for climate-related concerns, as diversity on company boards becomes a top concern.

According to the latest report for the 2020/21 proxy voting year, BIS voted against management on one or more proposals at 42% of shareholder meetings, up from 39% the year prior.

It voted against 1,862 directors at 975 companies globally relating to concerns about diversity at board level. This was also the main reason for voting against directors in the Americas region, the report stated.

“A diverse range of skills, experience, and demographic characteristics among directors is necessary for boards to be effective and avoid ‘group think’,” BIS said. “The turbulent events of 2020 placed an increased focus on issues such as climate change, social and racial equality, treatment of the workforce, and economic resilience, among others. More than ever, we believe company valuations can be significantly influenced by these, and other sustainability-related risks.”

In the Asia Pacific region, the report cited “inadequate independence” as the top reason for voting against directors at shareholder meetings. Across the voting year, BIS voted against 1,448 directors in the region.

BIS supported management recommendations on 84% Say on Pay proposals to approve executive compensation, adding that most pay proposals voted against were at companies located in EMEA, where BIS voted against management on 33% Say on Pay proposals, compared to 26% the previous year.

“The increase is largely attributed to Covid-19 related in-flight adjustments that companies made to reward executives despite missing financial performance targets, reducing their workforces, or taking government financial support,” the report stated. “BIS opposed executive pay programmes when companies were not able to explain how these adjustments supported long-term, sustainable value creation.”

Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021. Winner of Aegon Asset Management's Institutional Journalist of...