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Companies that are not yet actively disclosing their environmental, social, and governance (ESG) policies will soon find that such reporting isn't just a good idea, it's a mandate. Considering the recent announcement from BlackRock, the world's largest fund manager, the timeline for publishing this information just became much shorter.
Leading by example
BlackRock has more than $7 trillion in assets under management and is estimated to be a top 3 holder in more than half of all US publicly held companies. Companies don't tend to make contact with BlackRock portfolio managers or compliance officers due to the passive nature of the firm's funds. (More than one-third of BlackRock's assets are in the form of ETF's, making them the largest global provider of these index-tracking mutual funds that can be traded like stocks.)
Despite the lack of contact, management teams are often unnerved at the potential sway BlackRock could have if the firm turned negative on their company.
This past January, BlackRock informed the investment community and the public of its plans to put sustainability at the center of its investment strategy. It is making good on its promise and setting the example for other firms, starting with strengthening its internal focus on gender equality and affordable, clean energy.
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