Larry Fink, CEO of $6.3 trillion manager BlackRock, just sent a warning letter to CEOs everywhere
- BlackRock CEO Larry Fink sent a letter to public company CEOs Tuesday, outlining his expectation that companies start accounting for their impact on society.
- BlackRock, a $6.3 trillion asset manager, is doubling the size of its investor stewardship program, which aims to engage with companies rather than relying on proxy voting.
- "Society is demanding that companies, both public and private, serve a social purpose," Fink writes in the letter.
BlackRock CEO Larry Fink just sent a warning shot to CEOs across the world: Start accounting for the societal impact of your companies, or risk disappointing the largest asset manager in the world.
In a letter to CEOs of public companies, Fink, whose firm manages $6.3 trillion in assets, said companies need to demonstrate a strategy for long-term value creation and financial performance, and that understanding a company's impact on the world is a key component.
Simply managing for short-term shareholder profit is not an acceptable management strategy, according to Fink.
"Society is demanding that companies, both public and private, serve a social purpose," Fink writes in the letter. "To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate."
Fink announced that BlackRock would be ramping up its investor stewardship efforts, an initiative started in 2011 to favor engaging with companies and their management over proxy voting. He said the stewardship team will double in size over the next three years under the new leadership of Barbara Novick, vice chairman and a cofounder of BlackRock.
"BlackRock recognizes and embraces our responsibility to help drive this change," Fink writes.
He continued: "The growth of our team will help foster even more effective engagement with your company by building a framework for deeper, more frequent, and more productive conversations."
Here are some more highlights from Fink's letter (emphasis ours):