BlackRock’s illusion of choice: Are investors truly empowered — or manipulated?

Likely based on the attention given to its control of proxy voting, BlackRock has unveiled what it calls “a new proxy voting opportunity in iShares Core S&P 500 ETF (IVV).” The multinational investment giant notes that this particular product is its largest and among the most widely held exchange-traded fund.

While giving individual investors a say in the votes related to their holdings is a good thing, this new scheme on closer inspection appears to be a way for BlackRock to push climate and social-related policies while making it seem like clients voted for them. Very sneaky.

Following U.N. guidance seems like a horrible way to vote on issues related to a publicly traded company.

If you receive one of these notices from your financial institution or otherwise, make sure to review it closely and to choose wisely so that you get some say, even if not the ideal one.

Digging into the options, you don’t actually get to vote on each proposal. Rather, you get the illusion of choice by picking from various policy options. BlackRock portrays this opportunity as “you can now have a greater say in how your votes are cast.”

The first option is simply to let BlackRock vote on your behalf.

Of the six additional options, “the ISS Socially Responsible Investment Policy (SRI)” is aligned with “social responsibility.” The company notes, “The active ownership and investment philosophies of leading globally recognized initiatives, such as the United Nations Environment Programme Finance Initiative (UNEP FI), the United Nations Principles for Responsible Investment (UNPRI) and the United Nations Global Compact are incorporated.” Following U.N. guidance seems like a horrible way to vote on issues related to a publicly traded company.

Another option, the “ISS Catholic Faith-Based Policy,” strangely proclaims the policy is “broadly consistent with the objectives of socially responsible shareholders as well as the teachings of Catholicism and Christianity.” This seems intended to catch the eye of someone who wants to vote with their values and may skip the fine print about the social and environmental impact part of the policy.

Of the six additional policy choices (outside just going with BlackRock), five of the six mention social, environmental, or climate considerations.

Not surprisingly, I am considering the one that doesn’t mention any of the above and that focuses on prioritizing fiduciary responsibility (as any responsible board should). But I have not made a final determination.

While this new proxy voting scheme doesn’t really seem to resolve the issues that created the need to begin with, it is a first step. If you receive a notice from BlackRock or a similar option from another asset manager, be sure to read the detailed supporting material carefully and make the best choice you can.

Then continue to use your voice. Tell BlackRock you want more of a say than just a handful of choices to ensure your money isn’t put into initiatives that work against your ability to earn a good return on your investments.