BlackRock Plans to Push Companies on Racial Diversity in 2021

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BlackRock Inc., the world’s largest asset manager, plans to push companies next year for greater ethnic and gender diversity for their boards and workforces, and says it will vote against directors who fail to act.

The money manager, which oversees more than $7.8 trillion of assets, is asking U.S. companies to disclose the racial, ethnic and gender makeup of their employees — data known as EEO-1 — as well as measures they’re taking to advance diversity and inclusion, according to a stewardship report released Thursday.

“We are raising our expectations,” New York-based BlackRock said in the report. “An inclusive, diverse and engaged workforce contributes to business continuity, innovation, and long-term value creation.”

Companies are under increasing pressure from investors and advocates to address diversity. State Street Global Advisors, which manages about $3 trillion for clients, said in August that it will ask companies about their metrics and goals to boost racial diversity in their ranks.

Nasdaq Inc. announced earlier this month that most companies listed on its U.S. exchange will have to include at least one director who identifies as female and one who identifies as an underrepresented minority or LGBTQ. Goldman Sachs Group Inc. has said the firm will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse.

BlackRock Chief Executive Officer Larry Fink committed this January to putting sustainability at the center of the firm’s investment strategy. But the company has been criticized by environmental groups for its failure to support climate-related resolutions, so the money manager said voting on shareholder proposals will play a bigger role in its stewardship efforts in 2021.

BlackRock also said it plans to ask companies about their political lobbying, the impacts their businesses have on key stakeholders, and their plans for the transition to a low-carbon economy. The firm said it’s raising its expectations for director independence and tenure, and that boards and management will be scrutinized at next year’s annual meetings over their responses to the Covid-19 pandemic.

On diversity, BlackRock said it expects U.K. companies to adopt the recommendations of the Parker and Hampton-Alexander Reviews, which call for increased female representation on boards.

BlackRock said 58% of its global workforce was male last year. In the U.S., 58% of employees were White, about a quarter were Asian, 6% were Latinx and 5% were Black. White people held almost 70% of the executive positions, followed by Asians at 22%, Blacks at 4% and Latinx people at 3%.

Political Leanings

BlackRock said it will ask companies to acknowledge their political activities and memberships with trade associations in the U.S. to determine whether they’re consistent with their public statements. Last week, the Principles for Responsible Investment, the world’s largest sustainable-investing group, said it plans to require its money manager affiliates starting in 2021 to disclose their engagements with policymakers to ensure their lobbying efforts are in line with appropriate environmental and societal goals.

As for stakeholders, BlackRock said it will engage with 150 companies whose practices may have had an adverse impact on customers, communities and other groups. The companies weren’t identified.

And regarding climate change, BlackRock said it will press more than 1,000 carbon-intensive corporations to spell out their climate-related risks. It focused on 440 companies this year, of which it put 191 “on watch.” BlackRock has said it may vote against their directors in 2021 unless they show progress on the environmental front.

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