There’s something brewing among our economy’s biggest institutional investors, risk analysts, and economic forecasters.
Larry Fink is the founder, chairman, and chief executive officer of BlackRock, one of the world’s largest investment firms with over $6 trillion in assets under its management. Each year, Fink writes to the CEOs of leading companies in which its clients are shareholders. “As a fiduciary,” Fink states, “I write on their behalf to advocate governance practices that BlackRock believes will maximize long-term value creation for their investments.”
In this year’s letter, Fink urges business leaders to focus on “long-term value creation”. BlackRock also said its “engagement priorities” for talking to CEOs would include climate risk and boardroom diversity.
Also included in the letter is this paragraph:
“Environmental, social, and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects. We look to see that a company is attuned to the key factors that contribute to long-term growth: sustainability of the business model and its operations, attention to external and environmental factors that could impact the company, and recognition of the company’s role as a member of the communities in which it operates. A global company needs to be local in every single one of its markets.”
As they say, read the whole thing.
BlackRock is not alone. Fund giant Vanguard, which led a successful shareholder resolution on climate disclosure and strategies at ExxonMobil, also declared climate risk and gender diversity “defining themes” of its investment strategy.
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