The American asset management giant is taking ever more influence on its portfolio companies. This year Blackrock knocked on both UBS' and GAM's doors with a gripe.

Larry Fink was overtaken by reality: the long-standing Blackrock boss pinpointed climate change as a fundamental risk for financial markets, in an annual letter to CEOs seven weeks ago. The reminder went out just before the outbreak of the coronavirus in western Europe and the U.S. 

That didn't stop Blackrock, the world's largest asset manager by funds and market capitalization, to hold fast to the demands it made of its portfolio companies over environmental, social, and governance criteria, or ESG. Blackrock on Monday fleshed out the criteria as part of its investment thinking in more elaborate detail.

Closer Dialogue

The result is not an exit from controversial investments like coal, or expanding Blackrock's own sustainable investments – but a reinforcement of its «stewardship» of its investments. Effectively, it plans to meddle more and agitate for change for vocally on bringing its portfolio companies into line with 17 goals laid out in Paris by the United Nations in 2015.

Interestingly, Blackrock named and shamed the companies it spoke to on the subject in the first quarter: in Switzerland, UBS and GAM were pulled up. Blackrock decried the asset manager on six of 11 possible topics including board pay, risk management, corporate strategy, and «human capital management,» or how it deals with employees. GAM is reportedly in the midst of cutting roughly 40 percent of its 900 staff.

Behind the Scenes

At UBS, Blackrock wasn't entirely happy with the Swiss bank's strategy – though the asset manager didn't elaborate on specifics. The Swiss bank is in the midst of a fit-and-trim of its $2.3 trillion private banking arm.

Blackrock's leverage with its portfolio companies is its considerable heft: thanks to numerous funds and index products, the U.S. asset manager is a major investor in countless blue-chip firms including both big Swiss banks. It holds nearly 5 percent of UBS as well as 4.2 percent of Credit Suisse. Until this year, Fink and Blackrock have griped behind the scenes only – 2020 represents the first year the asset manager is airing its grievances publicly.