Let us know about free updates
Simply sign up for ESG Investing Myft Digest and it will be delivered directly to your inbox.
BlackRock canceled a meeting with a company during the shareholders’ battle because it fears it could violate the guidance on investor activities issued by the U.S. Securities and Exchange Commission issued last week. .
BlackRock and other asset managers usually vote prior to corporate and activist campaigns and talk about the issue of regular proxy voting at annual shareholder meetings.
However, the practice is questioned by SEC guidance, which is widely interpreted as an attack on the use of environmental, social and governance (ESG) factors in investment. The change places more troubling regulatory requirements on fund managers who may be trying to influence the company’s behavior.
“This guidance exploded like a hand-rack in the middle of a pending proxy fight last week,” said Sidley’s partner Kai Liekefett.
BlackRock, the world’s largest asset manager, temporarily suspended the “stewardship” meeting to assess what changes to SEC rules mean, said someone familiar with the issue I did.
The SEC move is one of the larger regulatory efforts by state and federal officials to curb the power of most US companies, often due to the large size of index tracking funds. It’s the club. .
Until February 11, the SEC said that if a fund manager who owned more than 5% of the company stabs a company on issues ranging from execution compensation to environmental policy, it would “affect” corporate behavior. He said it would not be considered. So they were allowed to submit a relatively short form of their holdings known as 13-G, which are only “passive investors.”
Under the new rules, the criteria for triggering more troublesome 13-D filings have been expanded. Traditionally, 13-D applications have been booked primarily for activist investors such as hedge funds and investment managers who are trying to influence controls.
This guidance complicates the general practices among large fund managers of looming companies, discloses climate risks, diversifies executives, and takes other measures that say are for long-term shareholders. Masu.
While some of these issues are closely tied to the US culture war, the rules endeavor to eliminate corporate poisoning programs and other everyday corporate governance issues that have little to do with environmental and social issues. It’s also damaged.
Form 13-D requires a detailed explanation of why and how the investor has acquired its stock and investment objectives. Activist investors are also facing tighter deadlines to submit updates on stock purchases or sales in the SEC.
“This is an anti-ESG change,” said the lawyer who advises the major managers, but the knock-on effect will likely extend to the investment industry. “The practical effect of this would be to make it difficult to engage in ESG topics and put more pressure on managers given how managers are directly and informally involved. ”
Recommended
With over $1.1 billion under management, BlackRock has been heavily pressured by conservative US lawmakers to impact corporate America, given its key holdings in almost every large US company. I’m receiving it.
The SEC change came amid a surge in agency actions to move away from the Biden administration’s policies. They were recruited while President Donald Trump’s SEC chair candidate Paul Atkins was waiting for confirmation from the Senate.
BlackRock and the SEC declined to comment. It was not immediately known whether BlackRock’s biggest rivals, Vanguard and State Street, had cancelled the meeting.
Stefania Palma contributed a report from Washington
Climate capital
A place where climate change meets business, markets and politics. Check out the FT coverage here.
Are you interested in FT’s environmental sustainability commitment? For more information about science-based goals, click here
