Investment

Stewardship
2022 Policies Updates
Summary
 BlackRock’s purpose is to help more and more people experience financial well-being. We manage assets
on behalf of institutional and individual clients, the majority of whom are investing to meet long-term
financial goals, such as a secure retirement. Investment stewardship is central to our fiduciary
responsibilities to our clients to advance their long-term economic interests. We engage with companies
to promote corporate governance standards and sustainable business models that we believe contribute
to the durable, long-term profitability our clients depend on to meet their financial goals. At BlackRock we
take this responsibility very seriously and, consistent with our leadership position in the industry, have
invested to establish one of the largest investment stewardship teams.

Our Policy Updates in Context response – so must our policies. At the same time, we
recognize that companies are facing continued uncertainty
Each year, BlackRock Investment Stewardship (BIS) reviews
and pressures in a challenging business environment.
and updates our Global Principles and market-specific
proxy voting guidelines. These documents set out the core We update our Global Principles and regional voting
elements of corporate governance that guide our guidelines annually to reflect changes in market standards
investment stewardship activities globally and within each and to help companies understand our views on emerging
regional market, including when voting at shareholder corporate governance issues. In 2021, we made updates to
meetings. Our policies are informed by the fact that many of our policies in line with BlackRock’s intensified focus on
BlackRock’s clients are investing to achieve long-term sustainability across all our investment activities on behalf
financial goals. of clients. In this context, our 2022 policy updates are more
incremental, seeking to reflect our latest views on certain
BIS is committed to constructive, long-term-focused
governance issues and incorporating insights gained from
engagement that supports companies in their efforts to
company engagements, client feedback, regulatory
deliver durable, long-term value to shareholders. As
developments, and BlackRock and third-party research.
companies’ operating environments change in response to
Below we outline five notable updates we have made to our
consumer trends, public policies, and macroeconomic
2022 Global Principles, which are:
factors – and corporate governance standards evolve in

Climate risk : We continue to ask that companies disclose a net zero-aligned business plan that is

01
consistent with their business model and sector. For 2022, we encourage companies to demonstrate that
their plans are resilient under likely decarbonization pathways, and the global aspiration to limit warming
to 1.5°C. We also encourage companies to disclose how considerations related to having a reliable energy
supply and just transition affect their plans.

02
Board diversity: We are strengthening our focus on diversity of personal characteristics on boards,
which in our view should aspire to have meaningful diversity of membership, at least consistent with local
market regulatory requirements and best practices. We recognize that building a strong, diverse board
can take time.

Sustainability reporting: Given continuing advances in sustainability reporting standards, in

03
addition to our ask that all companies report in alignment with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), we are evolving our perspective on sustainability reporting
to recognize that companies may use standards other than that of the Sustainability Accounting
Standards Board (SASB), and reiterate our ask for metrics that are industry - or company-specific.

04
ESG in executive compensation: We highlight that if environmental, social, and governance (ESG)
criteria are included in executive compensation programs, those metrics should be rigorous, aligned with
a company’s strategy and business model, and linked to company performance.

Changes to corporate form: We introduce our position that companies or shareholders proposing to

05
change a company’s corporate form (e.g., public benefit corporation) should put the measure to a
shareholder vote, if not already required to do so under applicable law. Managers or shareholders
proposing the changes should clearly articulate in their proposal how shareholders and different
stakeholders would be impacted.

BLACKROCK 2022 BIS Policies Updates Summary 2

Overall, our views on investment stewardship topics contribute to the development of alternative energy sources
continue to reflect the corporate governance standards and and low-carbon transition technologies that will be
norms that we believe support long-term value creation, essential to reaching net zero. We also recognize that some
developed over the years through our engagements with continued investment is required to maintain a reliable,
companies, clients, practitioners, and the broader market. affordable supply of fossil fuels during the transition. We
The market-specific voting guidelines have been updated to ask companies to disclose how their capital allocation
reflect these changes, along with any changes specific to across alternatives, transition technologies, and fossil fuel
the local market. Our revised policies will be effective from production is consistent with their strategy and their
January 1, 2022. In Q1 2022, we will publish updated emissions reduction targets.
Engagement Priorities and thematic commentaries, which
will provide greater detail on BIS’ areas of focus that we
Progress on
believe can contribute to companies’ ability to deliver
sustainable long-term financial performance. 02 Board Diversity
BIS has long asked boards to consider diversity in their

01 Understanding the director nomination process. We are interested in diversity

in the board room as a means of promoting diversity of
Energy Transition thought and avoiding ‘group think’, which we believe leads
Over the last two years, BlackRock has made sustainability a to more innovative decisions and better long-term
key component of the way we manage risk, construct economic outcomes for companies and our clients. We ask
portfolios, design products, and engage with companies, boards to disclose how diversity is considered in board
based on our conviction that sustainability risk – and composition, including demographic characteristics such
climate risk in particular - is investment risk. as gender, race/ethnicity, and age, as well as professional
characteristics, such as a director’s industry experience,
We understand that climate change can be very challenging
areas of expertise, and geographic location. We assess a
for many companies as they seek to drive long-term value
board’s diversity in the context of a company’s domicile,
by mitigating risks and capturing opportunities. A growing
business model, and strategy.
number of companies, financial institutions, and
governments have committed to advancing net zero. There When nominating new directors to the board, we ask that
is growing consensus that companies can benefit from the there is sufficient information on the individual candidates
more favorable macroeconomic environment under an so that shareholders can assess the suitability of each
orderly, timely, and just transition to net zero. Many individual nominee and the overall board composition.
companies are asking what their role should be in These disclosures should give an understanding of how the
contributing to a just transition – in ensuring a reliable collective experience and expertise of the board aligns with
energy supply and protecting the most vulnerable from the company’s long-term strategy and business model.
energy price shocks and economic dislocation. They are also
We have engaged companies on board diversity for many
seeking more clarity as to the public policy path that will
years. That engagement informs our voting guidelines for
help align greenhouse gas (GHG) reduction actions with
2022. For example, in the U.S., we believe boards should
commitments.
aspire to 30% diversity of membership and encourage
In this context, BlackRock in 2021 asked companies to companies to have at least two directors on their board
disclose a plan for how their business model will be aligned who identify as female and at least one who identifies as
with the global aspiration to reach net zero GHG emissions a member of an underrepresented group. We will look to
by 2050, consistent with their business model and sector. the largest companies (e.g., S&P 500) for continued
As part of this disclosure, for 2022, we encourage leadership.
companies to demonstrate that their plans are resilient
In the UK, we continue to look for companies to have
under likely decarbonization pathways, and the global
boards with at least 33% female directors and encourage
aspiration to limit warming to 1.5°C. We also encourage
them to have at least one director of color, in line with the
companies to disclose how considerations related to having a
recommendations of the Hampton-Alexander and Parker
reliable energy supply and just transition affect their plans.
reviews, respectively.
Consistent with our current approach, we will continue to
In other markets globally, we believe boards should aspire to
look for companies to set short-, medium-, and long-term
meaningful diversity of membership, at least consistent
science-based targets, where available for their sector, for
with local regulatory requirements and best practices, while
GHG reductions and to demonstrate how their targets are
recognizing that building a strong, diverse board can take
consistent with the long-term economic interests of their
time.
shareholders. Companies have an opportunity to use and

BLACKROCK 2022 BIS Policies Updates Summary 3

 04 Addressing ESG Metrics in
Board demographic diversity can usefully be disclosed in
aggregate, consistent with local law. Our approach will
necessarily be sensitive to companies’ individual Executive Compensation
circumstances, including the market in which they operate Our principles have long articulated our view that
and their size. However, as society and workforces become performance metrics for incentive plans should be
increasingly diverse, BIS believes that diverse boards can stretching and aligned with a company’s long-term strategy
promote greater diversity and resilience in the leadership and business model. BIS looks to the board to set incentive
team and the workforce more broadly, and ultimately enable pay targets that are transparent and linked to performance.
companies to better respond to the needs of their In response to inquiries from companies, as well as greater
stakeholders and deliver long-term shareholder value. interest among other stakeholders, we have added to our
2022 Global Principles that BIS does not have a binary
position on the use of ESG-related criteria in compensation

03 Evolving
Sustainability Reporting
programs, but believes that where companies choose to
include them, those metrics should be aligned with a
company’s strategy and business model and should be as
As we have for several years, BIS will continue to ask
companies to make robust sustainability disclosures so rigorous as other financial and operational targets.
investors can more effectively assess the management of
the environmental and social drivers of risk and value in
their business. This will continue to include asking 05 Introducing Our Position on
Changes to Corporate Form
companies to report in line with the recommendations of
We have observed growing interest in how a company’s
the TCFD and to supplement that disclosure with metrics
purpose is enshrined in its legal structure. In our 2022
that are industry- or company-specific. The TCFD
Global Principles, we explain that we believe it is the
framework is a useful way for companies to disclose how
responsibility of the board to determine the corporate form
they identify, assess, manage, and oversee a variety of
that is most appropriate given a company's purpose and
sustainability-related risks and opportunities. SASB’s
business model. Companies proposing to change their
industry-specific guidance can help companies identify key corporate form to a public benefit corporation, or similar
performance indicators across various dimensions of entity, should put it to a shareholder vote, if not already
sustainability that are financially material within their
required to do so under applicable law. Supporting
industry.
documentation from companies or shareholders proposing
Given continuing advances in sustainability reporting the change should clearly articulate how the interests of
standards, we recognize that some companies, in addition shareholders and different stakeholders would be impacted,
to TCFD, may report using standards other than SASB, as well as the accountability and voting mechanisms that
and in certain cases are required to by regulation. In such would be available to shareholders should a company
cases, we ask that companies highlight the metrics that are change its corporate form. As a fiduciary on behalf of
industry- or company-specific. clients, we generally support such management proposals if
our analysis indicates that shareholders’ interests are
adequately protected. As in all cases, shareholder proposals
We have long called for a single, globally consistent set on this issue are evaluated on a case-by-case basis.
of baseline sustainability reporting standards on which
different jurisdictions can build. We welcomed the Looking ahead to 2022
announcement by the International Financial
These policies are deliberately high level and not
Reporting Standards Foundation in November 2021
prescriptive. We want to inform investee companies of our
that it would form an International Sustainability
views on key corporate governance and sustainability
Standards Board (ISSB), which will work to deliver a
matters and to help them identify areas where their
comprehensive, global baseline of sustainability -
approach may differ and thus where engagement may be
related disclosure standards. We believe this will help
warranted. We also aim to provide transparency to our
drive progress toward the convergence needed to
clients about our views on the corporate governance and
improve the quality of information available to
sustainability practices that we promote at the companies
investors and other stakeholders, while reducing the
in which BlackRock is invested on their behalf. We anticipate
reporting burden on companies. We also hope the ISSB
that the focus on good governance, sustainability, and
will build on the work that’s already been done to
company performance will continue to evolve in the coming
establish industry-specific standards that explain
year. Strong leadership and responsiveness to changing
material sustainability factors driving enterprise value
conditions will be key to delivering value for shareholders in
creation, such as those developed by SASB.
the face of near-term business challenges and longer-term
shifts in society, including the global energy transition.

BLACKROCK 2022 BIS Policies Updates Summary 4

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