BlackRock has been promoting equitable policies for its investment criteria for several years, such as when CEO Lawrence Fink told CEOs in 2018 that they needed to contribute to society as well as make profits. This year in his letter to CEOs he urged companies to “wade into sensitive social and political issues” since that is where stakeholders were going.

Now the company is targeting another issue: it wants to see the assets and companies in which funds managed by BlackRock have a controlling interest adopt a Responsible Contractor Policy.

Under the policy, BlackRock Real Assets will support the selection of “responsible contactors” who deliver high quality services and appropriately train and fairly compensate their employees for construction, maintenance and operating services.

BlackRock says the Responsible Contractor Policy is a reflection of BlackRock Real Assets' support for a “healthy and profitable business environment governed by ethical industry practices.”

“The demand for infrastructure and real estate investments in the United States presents a tremendous opportunity both for our clients and for all of our partners,” said Jim Barry, chief investment officer of BlackRock Alternative Investors and global head of BlackRock Real Assets. “Core to BlackRock Real Assets' investment process is the integration of ESG considerations, including sound governance practices, which we believe are essential to building resilient portfolios for our clients.”

In other words, the new policy does more than just benefit contractors. As with its other governance initiatives, BlackRock says that it believes that business-relevant environmental, social and governance factors can contribute to a company's long-term financial performance and can enhance long-term risk adjusted returns for clients.

The standards for this designation are stringent. Sean McGarvey, president of North America's Building Trade Unions, for example, says that BlackRock's Responsible Contractor Policy “is among the strongest and most comprehensive in the investment management industry.” NABTU has been working with BlackRock in developing some of its governance policies and recently gave BlackRock Real Assets an “A” rating in a recent assessment that looked at how well fund managers connect pension fund investments to projects that create union jobs. BlackRock Real Assets received high grades across all categories, including policy enforcement, union work hours, communication with labor, and support of third party neutrality in the event of union organizing campaigns.

What the Policy Says

The policy will subject BlackRock Real Assets to the following guidelines in its selection of independent contractors:

A bidding process that is competitive and is inclusive of firms who meet standards for “responsible contractors”;
Independent contractors must provide a Responsible Contractor Self-Certification Form;
BlackRock Real Assets or operating company managers will use commercially reasonable efforts to exclude debarred contractors;
BlackRock Real Assets will support a position of neutrality in the event of a campaign to organize workers.

Instant Insights /

BlackRock Adds a Responsible Contractor Policy to its Real Assets Governance

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