Takeaway for Boards: A continued focus on the best long-term interests of the corporation’s stakeholders (including shareholders and employees) should naturally drive long-term value creation. Blackrock’s scaled model and its diversity in investment offerings that are centered on empowering clients has resulted in it being the highest-performing financial services stock in the S&P 500 since their IPO in 1999. Trust & Fiduciary Dutyīlackrock’s CFO refers to dollars invested with Blackrock as “units of trust” that belong to their clients, and their fiduciary duty to their clients is central to everything they do. This article provides a summary of themes from the 2023 letter and provides our perspectives and key takeaways for consideration. While ESG clearly remains an imperative for Blackrock, the tone of the letter shifts towards the broader sentiment that ESG strategy is an important part of business strategy and that climate risk is investment risk There were two notable differences in Fink’s approach to the letter for 2023:įink has issued one letter this year to all stakeholders as he states we (shareholders, investors, corporations, government, etc.) are all in this together and will need to work together on big global issues Long-term investment would boost returns, she said.Larry Fink’s annual Letter to CEOs has become an anticipated dispatch that sets the tone for the upcoming proxy season, and this year’s edition is no exception. Theresa Whitmarsh, of the Washington State Investment Board, one of America’s biggest institutional investors, claimed “companies with a myopic focus on short-term earnings are sowing the seeds of their own destruction”. Short tenure is a big problem.” However, he predicted that Fink’s letter will “spark change in the financial community”. Mr Ghosn added: “Every day we see CEOs fired because shares didn’t move in the last year. She added: “A bunch of number-crunchers put out a spreadsheet and think that is strategy.” The whole world is ratio and accounting driven.” Shareholders “blindly look at numbers”. Mrs Nooyi said: “Finance and accounting has trumped strategy excessively. “Young companies don’t have to worry about short-term results, but if we had negative quarterly results, we would be crucified,” he said. They kept telling me, 'Why are you Mother Teresa?'” “If you are doing something truly strategic, it evokes criticism. “when you start focusing on the long term and you really want to transform the company, investors are typically impatient. And they’re highly critical.” Mrs. Mrs Nooyi lamented the emphasis on short-term financial performance. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate,” the letter said. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. “Society is demanding that companies, both public and private, serve a social purpose,” Fink wrote. Understanding a company’s effect on the wider world was also vital, he said. In what is being referred to as “Larry’s Letter”, Fink said that they would need to start demonstrating a strategy for long-term value creation and financial performance. The investment house has $6.3 trillion (£4.5 trillion) under management, making Fink arguably the single most influential investor on the planet.įink detonated a bomb in boardrooms everywhere earlier this month with a letter to the bosses of all the companies it owns shares in, saying they could no longer afford to focus simply on profit. The charge is being led by Larry Fink, the founder and chief executive of the world’s biggest asset manager, Blackrock. A growing movement of senior business figures, economists, and powerful investors from across the globe is calling for capitalism to be re-imagined so that companies everywhere serve a social purpose.
0 Comments
Leave a Reply. |