Today, BlackRock published our Q3 Global BlackRock Investment Stewardship (BIS) report, which provides insight into the work of our stewardship team over the quarter. The report discusses how enabling investors to better identify, assess, measure and monitor sustainability-related risks is crucial to our role as stewards for our clients’ capital. That is why in January 2020, we asked that companies publish reports that aligned with the recommendations of the Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) framework.
The impact of BlackRock’s efforts can be seen in the growing number of companies filing disclosures aligned to these standards. By the end of Q3 2020, we had seen a 400% increase in SASB “reporters”.
- SASB by the end of Q3 2020: 403 unique companies had reported SASB metrics; 232 of them domiciled in the U.S. (58%) and 171 domiciled outside the U.S. (42%):
- Of these, 215 are part of the S&P Global 1200 Index
- This figure is 5x the number of SASB reporters for the same period last year (80 companies); 3.4x the total number of reporters for the full year 2019 (117 companies)
- TCFD has garnered significant support from over 1,400 organizations representing a market capitalization of over $12.6 tn (Sept. 2020). An increasing number of policy makers and stock exchanges around the world, such as the UK’s Financial Conduct Authority and the New Zealand government, are recommending or mandating TCFD reporting.
The uptick is encouraging. However, one of the top challenges to greater adoption we hear from the directors and leadership teams is the confusion caused by the various frameworks or standards.
Today, BIS adds its voice to the growing support for convergence of the different private sector reporting frameworks and standards to establish a globally recognized and adopted approach to sustainability reporting.
- We see the approach proposed by the IFRS Foundation as the most practicable and likely to succeed.
- IFRS Foundation could work to minimize the reporting burden on companies and achieve the optimal results for users of company reporting on sustainability.
- Progress may take some time. BlackRock will continue to advocate for TCFD and SASB-aligned reporting until a global standard is established.
- IASB and IAASB guidance says climate risk implicitly covered in international accounting and auditing standards. Accordingly, BIS expects increased investor scrutiny of the assumptions underlying financial reports, with concerns reflected in engagement and voting.
Along with this report, we have published a new commentary on this subject, Sustainability Reporting: Convergence to Accelerate Progress.
Q3 2020 Key Statistics
Continued increase in engagements vs Q3 2019 despite the ongoing disruption from the COVID-19 pandemic:
- BIS held 559 engagements (+21%) with 490 unique companies globally across a range of ESG topics, including the continued impact of COVID-19 across human capital management and corporate strategy.
- 324 engagements on environmental issues (+238%), while continuing to monitor companies’ progress in line with the TCFD framework and SASB standards.
- Focus on board diversity and skillset necessary to support corporate strategy execution over the long-term: 260 engagements (+17%) on board composition; 200 engagements (+31%) on executive compensation
- BIS voted at over 2,600 meetings on over 22,100 resolutions.
- Continue to leverage all aspects of stewardship in support of our clients’ long-term interests.
- Annual review underway across voting guidelines and engagement priorities to further embed sustainability into everything that we do in stewardship.
- Further detail of our review to come in the coming months, and ahead of the 2021 proxy season in which we expect more engagement and voting on material ESG risks.