define stockpile stewardship and its purpose

DEFINE STOCKPILE STEWARDSHIP AND ITS PURPOSE HOW TO

ESG indexes have their own specific index inclusion (or exclusion) rules.Index providers have developed indexes that exclude certain exposures (e.g., tobacco, controversial weapons) as well as suites of ESG-oriented indexes in response to demand from asset owners.Index providers offer both broad market and specialized indexes.Index providers develop index construction rules that drive the inclusion of securities in indexes.Traditional asset managers (e.g., mutual fund managers) generally do not take seats on public company boards.Asset managers do participate directly in the economic results of companies in which they invest on behalf of clients.Likewise, there is a wide range of approaches to investment stewardship across the asset management industry.There are many different business models of asset management, with companies offering a wide range of products to meet the needs of various clients.Asset managers are fiduciary agents, required to act in the best interest of their clients, the asset owners.

DEFINE STOCKPILE STEWARDSHIP AND ITS PURPOSE HOW TO

How to handle their responsibilities as public company shareholders (e.g., proxy voting policies, reliance on proxy advisors, and/or insourcing versus outsourcing of investment stewardship activities).

Whether to manage their assets internally or outsource to an external asset manager.

Establishing investment policies (e.g., investment objectives, asset allocation policies, and approach to sustainability, or ESG matters).

They make critical decisions about how their money is invested, including:

Asset owners are the economic owners of assets.

The roles and responsibilities of asset owners, asset managers, index providers, and proxy advisors are often conflated in discussions around investment stewardship.

We focus primarily on the US corporate governance landscape, but similar practices exist globally. At BlackRock, we take an engagement-first approach where proxy voting is only one component of our process. In addition, we highlight publicly available data on the voting records of US-registered mutual funds, which demonstrate considerable variability in voting patterns among asset managers.

Our overarching goal is to encourage companies to deliver long-term, sustainable growth and returns for our clients.

We then explore the different approaches to investment stewardship, including BlackRock’s engagement-first approach. In this post, we review the roles of the stakeholders in the investment stewardship ecosystem, including asset managers, asset owners, index providers, and proxy advisors. Just as we expect the companies in which we invest to understand the macroeconomic and industry trends in which they operate, we also believe that a company’s awareness of regulatory and societal trends helps drive long-term performance and mitigate risk. Our mission is to create a better financial future for our clients and our number one focus is on generating long-term sustainable performance. How do asset managers approach investment stewardship and to what degree do they factor in environmental, social, and governance (ESG) considerations?įor BlackRock, the answers are inseparable from our role as a fiduciary to our clients’ assets. This trend has fueled the growth of the asset management industry and led to questions around what impact, if any, asset managers should have on the companies they invest in.

Investors are increasingly turning to convenient, low-cost investment solutions such as index funds to help save for retirement and other important financial goals. Larry Fink, BlackRock, Annual Letter to CEOs, January 2018 To sustain that performance, however, you must also understand the societal impact of your business as well as the ways that broad, structural trends –from slow wage growth to rising automation to climate change –affect your potential for growth. Your company’s strategy must articulate a path to achieve financial performance.

Define stockpile stewardship and its purpose