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BlackRock offers update on dumping coal

BlackRock has offered its first major update on investment stewardship since it said it would dump thermal coal from active portfolios.

The investment giant's voting efforts increased in 2020, with the number of company engagements increasing by 47% in 2019-2020 compared to 2018-2019.

Looking at environmental engagement, BlackRock engaged 289% more frequently with the number of engagements on environmental issues increasing from 316 to 1230.

There was a huge increase in social engagements too, up 146% from 353 in 2018-2019 to 870 in 2019-2020.

Governance remains the ESG issue that BlackRock engages on the most though. In 2018-2019 BlackRock engaged on governance issues 1931 times and in 2019-2020 that increased to 2835 times (up 47%).

"Our approach employs a natural escalation process. If we are not satisfied with a company's disclosures, we typically put it 'on watch' and give the company 12 to 18 months to meet our expectations," BlackRock said.

"During the 2020 proxy season, we took voting action against 53 companies for their failure to make sufficient progress regarding climate risk disclosure or management."

That action meant BlackRock voted against the re-election of one or more members of a company's board, voted against the discharge of directors or the entire board, or voted for one or more climate-related shareholder proposals.

BlackRock provided some examples of the companies it engaged with as part of the report. It voted against directors of ExxonMobil due to significant concerns about climate risk management.

"We continue to have several areas of significant concern: Exxon's failure to have clear, long-term greenhouse gas reduction targets; the company's lack of disclosure around the degree of warming it expects under its stated strategy; and a lack of evidence that the board is fulfilling its duties of independent oversight and leadership," BlackRock said.

It also voted against a director of US aviation manufacturer TransDigm due to the company's lack of climate risk reporting. Finnish electricity company Fortum was engaged with after it undertook a transaction that would increase its exposure to coal fired power generation, which BlackRock called a "retrograde" step.

BlackRock identified 244 companies in the last year that it said were not making sufficient progress on climate change; 191 of those were placed "on watch" meaning that BlackRock expects them to make changes or it will take voting action.

BlackRock's commitment to dumping thermal coal only relates to its active investments. Of the roughly US $7 trillion it manages about US $1.8 trillion are in active strategies.

Read more: BlackRockUSExxonESGFortum
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