BlackRock, Vanguard Revise Voting Structures

BlackRock, Vanguard Revise Voting Structures

The firms join the movement to include more investors in asset allocation decisions.

Reviewed by: Shubham Saharan
Edited by: Shubham Saharan

BlackRock Inc. and the Vanguard Group Inc., the two largest exchange-traded fund issuers, are looking to change voting practices to include retail investors as the battle over environmental, social and governance issues heats up.  

As the firms plan to tweak voting structures amidst flak from policymakers and other stakeholders, and questions around rollout and proxy voting efficacy linger ahead of the firms’ official launches, some experts are raising concerns about implementation of these moves.  

“It's sort of an incipient idea that pretty much all managers in the U.S. are working on at the moment,” Georgia Bullitt, partner in the asset management department at Willkie Farr & Gallagher, said in a panel appearance at the ETFGI conference last Monday, in reference to proxy voting.  

“I think people are still working on the operational aspects of this.” she added. “It really does look like it's going to happen, but there's more to be done.” 

BlackRock and Vanguard, who collectively house 480 U.S.-based ETFs, announced the launch of pilot programs for the upcoming year to increase investor input on proxy voting. The governance initiatives from the two firms come as companies have been lambasted for their ESG products and portfolios by politicians and other funds. The two asset managers follow Charles Schwab Corp., which announced mid-October that it will “poll fund shareholders to understand their overarching preferences regarding key proxy issues” in a company statement.  

Earlier this month, BlackRock announced it would give the option to institutional clients in additional U.K.-pooled funds the ability to “apply their stewardship preferences in a consistent way across a broader share of their overall portfolio allocation” in the upcoming proxy season. The change, BlackRock said, comes as investors vie for a greater voice in portfolio construction.  

“It’s clear there are investors who don’t want to sit on the sidelines; they have a view on corporate governance, and they want a meaningful way to express those views,” BlackRock’s CEO Larry Fink said in a statement to clients and other chief executives. “While some pension funds have long been actively involved in corporate governance, we’re working to make that easier and more efficient for a larger number of investors.” 

The new U.K. pilot from the world’s largest asset manager, whose iShares unit holds over $2.2 trillion in assets according to data, would enable their investors to vote on contested proposals. Currently, program participants are able to control how their shares are voted at corporate meetings, align their vote with an external advisor’s recommendation, or relinquish their choice with BlackRock’s stewardship team. The pilot piggybacks on the firm’s Voting Choice program launched last year, which already allows institutional investors partaking in $1.8 trillion in assets to decide how their shares should be voted.  

Vanguard, which has $1.9 trillion in AUM, similarly announced in early November that it will pilot “proxy voting policy options for individual investors” for some of the firm’s equity index funds in early 2023, according to a company statement. 

The firm added that it plans to "gather client and stakeholder feedback as we test this approach and explore the full range of options with respect to proxy voting choices for index funds." Vanguard currently has an internal stewardship team cast proxy votes for portfolio securities in their equity funds.  

Response to Policymakers  

For some experts, the change in the asset managers’ voting policy is a direct response to the criticism received from policymakers from both sides of the aisle, who threaten to, and in some cases, pull assets from firms. Last month, $1 billion was pulled from BlackRock from Republican states including Louisiana, Utah and Arkansas regarding ESG concerns, according to the Financial Times. 

New York City Comptroller Brad Lander also recently condemned BlackRock for the “fundamental contradiction between BlackRock’s statements and actions, while 19 Republican Attorneys General accused the firm of collaborating with climate activists instead of siding with clients earlier this year.”  

“This is part of the response to the backlash that BlackRock and others are now getting from the Republicans for pushing ESG policies and companies,” said Zohar Goshen, professor of transaction law at Columbia Law School, in an interview with  

He views their response as passing responsibility to the shareholders.

“I view that more as a preemptive move against the claim that they own too much voting power,” he noted. 

Marketing Spin? 

Meanwhile, other industry experts point to the minimal impact the voting changes would have on institutions, as historically low voter turnout, lack of awareness of issues, and corporation’s fiduciary responsibility to generate shareholder value may sometimes clash.  

“You get kind of a feather in your cap of ‘we get to respond to the needs of our clients, we get to operate in the investment community with a principled approach,” said Peter Rokkos, professor of labor studies and employment relations at Rutgers University, in an interview with “But in actuality, [firms] can still kind of consistently do what [they’re] doing with kind of a minimal impact at the end of the day, and whether the actual vote comes in one way or another.”  

Instead, both Rokkos and Goshen pointed to the possible additional influence given to institutional investors and fund managers via proxy voting given the dismal turnout in retail investor involvement. A 2022 survey by Broadridge and PWC found institutional investors voted 83% of the shares they held during the 2021 season, compared with the 30% voting rate of retail shareholders. 

Still, the survey found that investors were more active than ever.  

“It's an interesting approach; whether it's more marketing spin or otherwise, we kind of have to wait to see how the details play out,” Rokkos said. 


Contact Shubham Saharan at [email protected] 

Shubham Saharan is a markets reporter at Before joining the company, she reported for Bloomberg and the Financial Times. Saharan is a graduate of Barnard College of Columbia University.