Blackrock encourages the hiring and promotion of minorities and women.
BlackRock, with $ 9 trillion in assets under management, gives itself an incentive to meet environmental, social and corporate governance (ESG) goals by tying its own funding costs to ESG goals.
A consortium of banks has granted the asset manager a $ 4.4 billion 5-year line of credit to access it in the event of an emergency. Its borrowing costs will be reduced if the company achieves its goals of employing minorities and gender-diverse senior managers.
Indeed, the agreement conveys the message that banks can discount capital costs in exchange for social responsibility. Banks involved include Wells Fargo, the administrative agent; Citigroup, the syndication agent; and a long list of international banks including Bank of China, Barclays, Credit Suisse, Deutsche Bank, BNP Paribas and Royal Bank of Canada. Depending on BlackRock’s progress towards its ESG goals, interest rates can fluctuate by five basis points and the commitment fee can vary by one basis point.
To achieve the cheapest arrangement, the asset manager must increase the proportion of African-American and Latin-American employees in its workforce by 30% in three years. Today, African-American employees make up only 5% of BlackRock’s workforce and 3% of its senior executives.
The cabinet also plans to increase female representation within its ranks. Its short-term goal is to have women make up 30% of its senior leadership – directors or general managers. BlackRock plans to increase the share of women in its executive ranks by 3% each year.
Finally, BlackRock promises to integrate more companies with high ESG ratings into its funds. Currently, the fund manages $ 200 billion in sustainable investments; the goal is to increase this category to $ 1 trillion by 2030. BlackRock is actively pursuing its goals: The group recently launched two low-carbon Transition Readiness exchange-traded funds that have raised $ 2 billion.