Play Your Part: BlackRock Spotlights ESG Transparency
Published - 17 February, 2020
The world’s biggest fund manager, BlackRock, which manages assets worth $7 trillion has announced that it will now evaluate environmental, social and governance (ESG) metrics “with the same rigour as traditional measures such as liquidity and credit risk”. The fund manager says it is putting climate risk at the core of its investment choices. Larry Fink, the chief executive of BlackRock, says the financial world is undergoing “a fundamental reshaping” as the threat of climate change becomes more pressing.
According to the Financial Times, after BlackRock argued that companies needed to have a purpose beyond profits, it helped to grow the debate around responsible capitalism. The pledges made by Blackrock come after growing pressure on the group to take meaningful action on climate change to back up its environmentally friendly rhetoric. “BlackRock’s pledges have the potential to shift its investment policies. They also have the clout to influence the debate going on in boardrooms and at other asset managers,” the FT says.
Key pledges made by BlackRock include a promise to integrate ESG into all active management decisions this year. It will divest from companies that generate 25 per cent of their revenues or more from thermal coal from its actively managed portfolio by the middle of 2020. It also promises to double the number of ESG exchange traded funds to 150 by the end of 2021.
BlackRock says it will apply standards set by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).
In South Africa, to improve transparency, fund managers are being required to provide greater clarity on the performance of funds under their management, including the investment decisions in relation to ESG issues. This puts pressure on the already-stretched capacity of fund managers to participate in corporate action and proxy voting and to report on their participation in the fund.
Previously, this would be a manual, time-consuming and non-revenue generating activity. But modern tools offer some measure of relief by automating corporate proxy voting and elective events in a way that can be tracked, audited and reported on.
Proxy voting through iCA4M
The iCA4M platform is an alternative to admin-heavy, costly and non-revenue generating activities designed for fund managers. It provides proxy voting functionality to fund managers for electronic voting and supports the feeding of data from upstream systems such as ASISA while integrating final results back into line-of-business systems.
What this means is greater transparency and accuracy of the information that minimizes compliance, legal and financial exposure. iCA4M automates traditionally labour-intensive processes and empowers shareholders by providing a seamless online voting experience.
Want to ease some of the administrative burdens of ensuring transparency and compliance in your fund management activities? Get in touch with us to discuss how iCA 4 M could support you.