BlackRock issued its first in a series of investment stewardship commentaries on its 2021 priorities (we reported on here) with "Climate Risk and the Transition to a Low-Carbon Economy," which details its engagement approach with companies on climate risks and opportunities and the transition to a low-carbon economy.
Among the key takeaways:
- Companies should set rigorous short, medium and long-term targets.
- BlackRock expects companies to disclose scope 1 and scope 2 emissions and accompanying GHG reduction targets, and companies in carbon-intensive industries to also disclose scope 3 emissions.
- Companies should begin including substantive actions and GHG reduction targets into their processes and provide disclosures on how they are considering physical and transition risks in their long-term strategies.
- In lieu of a single climate expert director, directors should be sufficiently fluent in climate risk and the energy transition such that the board as a whole can provide appropriate oversight of the company’s plan and targets.
- As set forth in its voting guidelines, BlackRock may vote against accountable directors if corporate disclosures are insufficient to make a thorough assessment or a company has not provided a credible plan to transition its business model to a low-carbon economy, including short-medium-and long-term targets. It may also support shareholder proposals that it believes address gaps in a company’s approach to climate risk and the energy transition.
The commentary includes a list of factors (page 4) BlackRock may consider in its assessment of a company's approach to a transition to a low-carbon economy.
See our recent report: "BlackRock Speaks! Annual CEO/Client Letters"; these articles: "BlackRock's Latest Climate Instructions Come With a New Threat" (Bloomberg) and "CEOs should get fit for a zero-emissions economy, says BlackRock" (Institutional Asset Manager); and additional resource on our Institutional Investors page » BlackRock.
This post first appeared in the weekly Society Alert!