The 70 BlackRock Analysts Who Speak for Millions of Shareholders

The tiny group of analysts—BlackRock has round 18,400 workers all advised—takes care of the pursuits of traders within the agency’s $4.6 trillion value of passive funds. That means weighing in on issues as various as govt compensation, climate change and abortion access. Chief executives jockey for time on analysts’ calendars. They have the ability to unseat administrators and upend company decision-making. 

The group final yr engaged with 2,300 firms through emails, telephone calls and conferences and in the end voted on 165,000 proposals at 17,000 shareholder conferences. 

“It can feel like a lot of power sometimes,” mentioned a former funding stewardship group analyst.

The surging reputation of index funds has made their managers the most important shareholders in lots of public firms. That is very true of BlackRock, the world’s largest investor with some $10 trillion under management. The quantity of fairness the agency manages for passive traders has greater than tripled over the previous decade.

BlackRock’s development and the best way it has sought to wield its affect has rankled company executives, notably these within the oil-and-gas trade. BlackRock’s stewardship group voted in favor of 47% of environmental and social shareholder proposals final yr. Its help helped an activist investor win board seats at oil large

Exxon Mobil Corp.

“We have a new bunch of emperors, and they’re the people who vote the shares in the index funds,”

Charlie Munger,

the vice chairman of

Berkshire Hathaway Inc.

and Warren Buffett’s enterprise accomplice, said earlier this year. 

A group of Republican senators final month launched a invoice calling for particular person traders in passive funds to have the choice to vote their shares, a transfer meant to curb the ability of BlackRock and its ilk. 

Vanguard Group and

State Street Corp.

, BlackRock’s two largest rivals, even have small stewardship groups. Vanguard has round 60 analysts targeted on stewardship. State Street doesn’t disclose the dimensions of its stewardship group, however a 2020 Columbia Law Review article on company governance estimated its head depend at 12. The group has grown since then, an organization spokesman mentioned. 

BlackRock Chief Executive

Larry Fink

has mentioned he desires to get to a spot the place all particular person traders can vote their very own shares. The agency has on condition that choice to institutional traders that management some $2.3 trillion in property. Investors representing a few quarter of that sum have taken the corporate up on the provide. 

For now, the stewardship group is looking for those that can’t, or aren’t able to, vote their very own shares. 

It performs an particularly essential position for index-fund traders as a result of they “do not have the option to sell holdings in companies that are not performing as expected,” BlackRock mentioned in a February report on its priorities for the 2022 proxy season.

The funding stewardship group is led by

Sandy Boss,

who spent 20 years at McKinsey & Co. earlier than joining BlackRock in April 2020. 

Its analysts vary in seniority, and a few are contemporary out of school, a BlackRock govt mentioned. The group contains local weather scientists, engineers and corporate-governance specialists. They converse a complete of 20 languages and work in 10 international locations. 

Each stewardship analyst is assigned to cowl a particular trade. They dissect firm proxy studies and third-party analysis, together with ESG scores from MSCI Inc. and corporate-governance transparency scores from the nonpartisan nonprofit Center for Political Accountability. Analysts additionally conduct their very own analysis.

The group subscribes to analysis from Institutional Shareholder Services Inc. and Glass Lewis however doesn’t “blindly follow” the proxy-advisory companies’ voting suggestions, BlackRock mentioned in a current report. 

ISS helps the stewardship group display screen for routine, uncontroversial proposals. All the others are despatched to the stewardship group for evaluate. The group’s largest priorities are board high quality, technique and monetary resilience, govt compensation, local weather and human-resource points. 

Activist traders trying to shake up an organization’s board generally pitch the stewardship group immediately. In some circumstances, they introduce their director candidates to members of the stewardship group—in particular person or, for the reason that begin of the pandemic, just about. 

The group lately met candidates for

(*70*).’s

board backed by

Carl Icahn

in his marketing campaign to get the fast-food large to change how it treats pregnant pigs, in response to a BlackRock govt. (Mr. Icahn’s nominees lost.)

The group’s busiest season is mid-April to mid-June, when U.S. firms have a tendency to carry their annual conferences. Before a gathering that entails contentious shareholder proposals, stewardship analysts will current a suggestion to the group’s govt committee. The committee will generally seek the advice of with BlackRock’s active-fund managers, who make their very own voting choices. 

Voting choices are made by the stewardship group alone; Mr. Fink and different BlackRock executives haven’t any say. “They run the firm, we run the voting,” mentioned Ms. Boss in an interview. 

That doesn’t imply Mr. Fink has no affect.

In late 2020, Mr. Fink convened a name with a couple of dozen or so members of the group in cost of U.S. proxy votes, in response to folks accustomed to the matter. His message was clear: The group wanted to do a greater job explaining their votes to firm executives, the folks mentioned, notably round climate-related proposals. 

Mr. Fink’s major concern was round public notion. He didn’t need Wall Street pondering that BlackRock had gone too far in pushing an environmental agenda, the folks mentioned. 

The agency’s stance on local weather points has angered executives and put it on the outs with states which might be dwelling to fossil-fuel firms. 

West Virginia’s treasury funding board earlier this yr stopped utilizing a BlackRock fund after the cash supervisor urged firms to attain net-zero emissions by 2050. And final June, Texas passed a bill that requires state entities to cease doing enterprise with firms that boycott the fossil-fuel trade. While BlackRock hasn’t argued for such a boycott, many noticed it as a warning shot on the agency and its friends, which handle billions of {dollars} for Texas pensioners.

The BlackRock group has gone to higher lengths in recent times to elucidate the reasoning behind high-profile votes, such as in the Exxon proxy fight. Index funds are required to report their votes yearly with the Securities and Exchange Commission each August, and the group publishes studies on BlackRock’s web site quarterly. 

In a memo launched earlier this yr, the stewardship group mentioned climate-related shareholder proposals had change into extra prescriptive and “intended to micromanage companies.”

The group mentioned it could possible help fewer local weather proposals this yr than final.

Write to Angel Au-Yeung at angel.au-yeung@wsj.com