Securities Lending Viewed through the Sustainability Lens
Recently, questions have been raised about how securities lending aligns with sustainable investing. Some seek to portray short selling — and therefore lending securities which facilitates this — as incompatible with sustainability considerations. Others question how investors can still engage with companies whilst actively lending securities.
Generally, we expect that the likely long-term economic benefit to clients of casting votes would be less than the securities lending income. This is either because, in our assessment, the resolutions being voted on are routine and will not have significant economic consequences or because the outcome would not be affected by BlackRock voting the marginal holding of loaned securities.
While most voting items are routine and the outcome would not be affected by BlackRock’s vote, from time to time, the Investment Stewardship team may determine that the expected near- and long-term economic benefit of voting clients’ entire holding is greater than the anticipated lending revenue. We do not recall shares on loan to vote unless we can make the case that the optimal voting outcome would be economically beneficial for clients and voting all eligible shares in BlackRock’s portfolios would increase the likelihood of achieving that outcome.
The full publication is available at https://www.blackrock.com/corporate/literature/publication/securities-lending-viewed-through-the-sustainability-lens.pdf