![\"\"](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/11\/T5_0005_microscope-716x406.jpg\" "\\"T5_0005_microscope\\"\/")
<\/p>\n <\/p>\n
The office of outgoing New York City comptroller Brad Lander has said BlackRock is taking an overly conservative approach to engaging with US firms and that its stewardship reporting is not detailed enough.<\/p>\n
On Wednesday, Lander recommended<\/a> that three of the city\u2019s public pension systems terminate a $42 billion US public equity index mandate with BlackRock, as well as smaller mandates with Fidelity Investments and PanAgora Investments, over \u201cinadequate decarbonisation plans\u201d.<\/p>\n His recommendation followed an evaluation of the pension systems\u2019 49 public market managers, the remaining 46 of which met their climate expectations, including how they actively engage with portfolio companies to mitigate climate risk.<\/p>\n Climate stewardship<\/strong><\/p>\n Lander said his office had focused its evaluation of BlackRock\u2019s decarbonisation efforts on its public equity stewardship on behalf of the systems, and in a report<\/a> published on Wednesday sets out in detail what it wanted from the manager.<\/p>\n The office highlighted that BlackRock has \u201cbifurcated\u201d its climate stewardship approach with \u201ctwo co-existing but at times contrasting policies\u201d.<\/p>\n The investment giant offers a climate and decarbonisation policy (CDS) in addition to its benchmark stewardship policy. The former offers \u201cmore comprehensive\u201d climate stewardship such as setting science-based targets and measuring material Scope 3 emissions.<\/p>\n The office claims that \u201cuntil recently, BlackRock was unwilling to allow clients, including the Systems, to opt into its CDS policy unless the client delegated its proxy voting to BlackRock\u201d.<\/p>\n But in a \u201cwelcome change\u201d, the manager has changed its position and decided other clients can also opt into the CDS policy.<\/p>\n According to BlackRock\u2019s 2025 Global Voting Spotlight, as of 30 June, total funds and separately managed accounts that have chosen to apply the CDS proxy voting guidelines represent $158 billion of client index equity asset under management, \u201cor approximately 2 percent of our clients\u2019 total public equity AUM\u201d.<\/p>\n US firms and SEC guidance<\/strong><\/p>\n However, a key remaining concern for Lander was what he called BlackRock\u2019s \u201crestrictive\u201d approach to engagement with US listed firms where it owns more than 5 percent of shares.<\/p>\n In February, the US Securities and Exchange Commission (SEC) published new guidance<\/a> which requires more onerous ownership reporting from large shareholders under certain circumstances.<\/p>\n The SEC also withdrew an explicit note that engagement on executive compensation or other ESG issues \u201cwould generally not\u201d trigger a 13D filing.<\/p>\n Initially, in response to the SEC\u2019s move, BlackRock paused corporate engagements to digest the rule change.<\/p>\n However, it later told Responsible Investor that it had restarted corporate conversations<\/a>. At the time it said that to ensure compliance, it will highlight its role as a passive investor at the start of each engagement. \u201cBlackRock does not use engagement as a way to control publicly traded companies,\u201d a spokesperson added.<\/p>\n According to Lander\u2019s report, BlackRock has said it will not reach out \u201cproactively\u201d to these US companies individually \u201cas it relates to proxy voting issues (including director elections) except in narrow circumstances (proxy fights or material M&A votes)\u201d.<\/p>\n The report claimed BlackRock had said it will not \u201cset agendas for engagement\u201d or seek to influence companies\u2019 actions. The Comptroller said BlackRock\u2019s \u201cconservative\u201d interpretation of the SEC rules meant it was unable to meet the New York City funds\u2019 expectations regarding engagement.<\/p>\n Lander acknowledged some of the broader challenges around the new SEC rules, saying that BlackRock\u2019s rationale is not \u201csimply a matter of filing a longer, more complicated form\u201d.<\/p>\n The report said BlackRock had explained that filling in a 13D form could \u201cmaterially affect its ability to execute index investing for its clients\u201d.<\/p>\n For example, filing a 13D requires a 10-day pause in trading, which would prevent BlackRock from buying or selling the security in order to maintain the index exposure to it, \u201cpotentially leading to tracking error during that period\u201d, Lander\u2019s report said.<\/p>\n Regulators in certain sectors such as banks, insurers and utilities also use<\/a> the SEC\u2019s definition of passivity.<\/p>\n According to the Comptroller, BlackRock explained that if it were to file 13Ds at these companies it might have to take other actions such as selling down a position to get below the threshold.<\/p>\n While acknowledging that BlackRock\u2019s explanation is \u201cplausible,\u201d Lander noted other comparable firms take \u201ca less constraining\u201d approach. He directly compared it to fellow US giant State Street, which is also the systems\u2019 second largest manager.<\/p>\n According to the Comptroller, State Street\u2019s stewardship service has a \u201cmuch more robust\u201d approach to climate engagement with US companies than BlackRock.<\/p>\n In March, State Street pared back<\/a> and removed guidance on how it may vote on certain topics. It also added a disclaimer that it \u201cdoes not seek to change or influence control of any portfolio company through engagement\u201d.<\/p>\n At the time a spokesperson for State Street declined to comment when asked if there was a link between the changes to its voting and engagement policy and the new SEC rules.<\/p>\n BlackRock report<\/strong><\/p>\n BlackRock declined to comment on the Comptroller\u2019s view on its climate stewardship approach.<\/p>\n According to the manager\u2019s report in the 2024-25 proxy year, BlackRock Investment Stewardship (BIS) held more than 2,500 engagements with members of the boards and management teams of companies.<\/p>\n Its split by geography does not provide specific number on US engagements, but says the manager has engaged 943 firms in the Americas, which comprises seven markets.<\/p>\n In the CDS 2025 stewardship summary report, BlackRock said it engaged 137 companies globally, \u201cprimarily operating in the energy, materials, industrials, and financials sectors\u201d.<\/p>\n Both reports also pointed to the SEC\u2019s guidance, stating: \u201cWe comply with the requirements and do not use engagement as a way to control publicly traded companies.\u201d<\/p>\n Meanwhile, Lander also noted that BlackRock has not restricted stewardship actions with regards to non-US firms, where the SEC regulations do not apply.<\/p>\n \u201cTwo-thirds of the 900 companies on their CDS focus list are outside the US, so with non-US companies, BlackRock is sufficiently fulfilling the systems\u2019 climate expectations for their managers.\u201d<\/p>\n For that reason, the Comptroller recommended that the systems retain BlackRock for its non-US equity index mandates and formally vote to join the CDS so BlackRock can engage those non-US companies.<\/p>\n Engagement reporting\u00a0<\/strong><\/p>\n Lander also claimed that BlackRock\u2019s stewardship reporting is \u201cvery high-level\u201d and \u201cdoes not provide specifics about engagement outcomes, with the exception of limited anecdotal \u2018spotlight\u2019 columns in their annual stewardship report\u201d.<\/p>\n