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BlackRock's intervention in Asian firms' ESG issues heats up

The BlackRock logo is seen outside of its offices in New York City. (Reuters-Yonhap)
The BlackRock logo is seen outside of its offices in New York City. (Reuters-Yonhap)
BlackRock, one of the world’s largest investment management firms, has been increasingly exercising its shareholder rights in Korean firms while shifting its focus towards issues involving environmental, social and governance practices, data showed Friday.

The Federation of Korean Industries analyzed shareholder activities of three global institutions -- BlackRock, Vanguard and State Street Global Advisors (SSGA) -- in different regions around the world between July 2018 and June 2020.

The three global institutions exercised their shareholders’ rights 3,043 times during the July 2019-June 2020 period, jumping 48.4 percent from a year earlier, the data showed.

BlackRock, who exercised its shareholder rights more than other global institutions in Asia, claimed its rights 458 times in the July 2019-June 2020 period, soaring 92.4 percent from the previous year. Japan was counted separately from the Asian region for the report.

Among the three global institutions, the US investment firm also showed the greatest interest in Korean companies. It exercised its voting rights in 12 local firms during July 2018-June 2019 but the firm’s participation jumped to 23 the following year.

In the released report, FKI suggested keeping a watchful eye on the institutional investors’ growing power in exercising their rights on ESG-related issues. In line with the shifting trend, the business lobby group further warned local firms to take preemptive responses.

Regarding the matter, BlackRock’s participation on shareholder voting globally soared 14.1 percent on-year to 1,087 between 2019 and 2020. At the same time, its voting participation in the Asian region was 32 percent, higher than the average on combined regions.

While Vanguard’s exercising on shareholder voting regarding Asia’s environmental and social issues climbed 14 percent on-year, SSGA’s voting exercise on climate change also surged 150.8 percent on-year, over the cited period.

“Since former BlackRock workers have occupied key positions in the Biden administration, the institutional investors are expected to drive a hard bargain on ESG drive. We foresee their increasing interest in Korean firms and more intervention on ESG issues,” Kim Bong-man, head of international affairs division at FKI wrote in the report.

By Jie Ye-eun (