Raising the bar

BlackRock fully expects all its portfolio companies to follow suit, and sooner rather than later. Specifically, BlackRock is asking companies to do the following:

Immediately begin using the Sustainability Accounting Standards Board (SASB) reporting framework. BlackRock is a proponent of the SASB's clear set of standards for reporting sustainability information across a wide range of issues, from labor practices, to data privacy, to business ethics. BlackRock has asked companies to publish a disclosure in line with industry-specific SASB guidelines by year end, much as BlackRock has already done itself, or to provide a similar set of data in a way that is relevant to the business.

Be ready to implement the Task Force on Climate-related Financial Disclosures (TCFD) framework in the near future. TCFD's climate risk reporting recommendations ask companies for an operating plan that supports the Paris Agreement's goal of limiting global warming to less than two degrees. The framework covers climate-related risk along with the related governance issues that are essential to managing such risks. Since BlackRock itself is not yet in full compliance with the TCFD framework, it has not put a specific timeframe on mandating this level of reporting. However, BlackRock is actively working to bring its own reporting in line with the framework and is expecting its portfolio companies to do the same.

Delaying is not worth the risk

Companies that fail to heed BlackRock's suggestions in a timely manner could face real and immediate consequences. In its announcement, BlackRock stated that it will view lack of such robust disclosures as a sign that companies are not adequately managing ESG risks.

Instant Insights /

3 steps to take now to meet BlackRock's ESG standards

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