NEW YORK: BlackRock Inc has cited both the value and costs of shareholder proposals in a long-awaited letter to regulators weighing reforms to the proxy process, effectively looking for a middle ground in a hotly contested area of U.S. rulemaking.
The letter provided by a spokesman for the world's largest asset manager on Thursday was just one of thousands of backlogged comments to the U.S. Securities and Exchange Commission (SEC) that were due on Monday and still being posted to the agency's website.
But with some US$7.4 trillion under management, BlackRock's views have been eagerly awaited both by corporations supportive of the rule changes to streamline their annual meetings, and investor activists worried the SEC will make it harder to bring attention to environmental, social and governance issues.
Both sides had hoped that BlackRock would support them ahead of an SEC vote as soon as March, especially in light of a new focus on climate issues outlined by BlackRock Chief Executive Officer Larry Fink last month.
Instead, in the letter dated Feb. 3, BlackRock Vice Chairman Barbara Novick did not specifically address controversial ideas the SEC advanced in a partisan vote in November, such as raising the current threshold of US$2,000 worth of stock needed to file some resolutions.
"Shareholder proposals can be a valuable part of an investment stewardship process, however, it should be acknowledged that the costs of these proposals are borne by all shareholders," Novick wrote.
She also did not take a strong stand on related reforms the SEC is considering for proxy advisers, changes that have raised concerns from hedge funds.
BlackRock has previously declined to comment on its views in detail, and spokesmen did not respond to requests for comment on Thursday.
Among other big passive fund managers, Vanguard Group has filed comments supportive of the SEC's changes. A State Street Corp executive said in an interview last week the firm did not have a view on the matter. Some smaller active managers have criticized the reforms.
Richard Fields, a King & Spalding LLP attorney who represents corporations, said that in avoiding specifics in its SEC comments, "BlackRock has chosen to stay squarely on the fence."
That could reflect the fact that BlackRock's clients will have a wide range of views on the shareholder proposals, he added, but "one might have assumed that Fink’s January letter would herald a more assertive posture here."
Jon Hale, global head of sustainable investing research for Morningstar, said previously the new rules would undermine the process of engagement between shareholders and company managers on climate risk and other sustainability issues.
Asked about Novick's letter, Hale said by email, "I think it would have been more to the point for BlackRock’s letter to have said simply: Dear SEC: We don’t have a clear position on either of these issues. Sincerely, BlackRock."
(Reporting by Ross Kerber; Editing by Chizu Nomiyama, Jonathan Oatis and Tom Brown)