Rounding out its series of informative bulletins that detail its views and approach on its engagement priorities, BlackRock's new commentary on board diversity engagement explains the multiple bases for the investor's focus on this issue, as well as the following list of topics it may address with the board in the course of engagement that it believes "can demonstrate a robust approach to board diversity":
- Current board composition and how it reflects the company's stated strategy, trends impacting the business and succession expectations.
- Position on diversity and how that position has evolved over time.
- Board evaluation process, including how it influences succession planning and the director appointment process.
- The board's approach to phasing director tenures.
- Potential to have a slate of only diverse candidates.
- Deliberate steps the nominating committee (or equivalent) is taking to enhance board diversity.
- Director appointment process and how those involved countered unconscious biases.
- How directors cultivate a diverse network of professional peers. The common practice of incumbent directors identifying candidates for the board from their networks is not necessarily an impediment to a diverse board if those networks are diverse.
- If recruitment consultants are used to identify candidates, how the nominating committee assessed the consultant's networks and expertise in finding and placing diverse directors, especially first time directors.
In addition to board diversity fostering better decision-making, BlackRock notes that a diverse board provides a competitive advantage by visibly messaging to diverse current and prospective employees that they, too, can rise to positions in leadership. Likewise with customers and other stakeholders who are looking to see themselves and their views represented.
As previously reported, BlackRock expects at least two women on every board, and may vote against Nom/Gov Committee members if it believes board diversity hasn't been "adequately accounted" for.