As Polman and Winston say, “we need courageous leaders” that set aggressive goals to transform business into a force that “improves well-being for everyone it impacts and at all scale” and not only on climate change He strongly calls on the pride of CEOs and Boards to decide if they only want to be followers – or even extinct – or real leaders. The question is, will you lead, or will you be led?” and “will you go the way of the dodo, or will you be a phoenix?”Īs stated in these questions, Fink is very clear that taking action on climate change is a matter of now and how, not if. “Every company and every industry will be transformed by the transition to a net-zero world. Is this the end of “too big to fail” companies "right" to be access the financial markets? Climate change as an investment risk. And the duty to attract that capital in a responsible and sustainable way lies with you.” The explosion of capital availability - global financial assets total $400 trillion – is a massive opportunity for business of any size – especially small start-ups – to bring innovative solutions to life, but Fink warns that “ access to capital is not a right. How is your company’s culture adapting to this new world?” Financing innovation. “Companies not adjusting to this new reality and responding to their workers do so at their own peril.” While Polman and Winston encourage companies to “think about labor not as a cost but as an asset to nurture”, Fink goes even further stating that without a change companies are in serious danger and pose straight forward and direct questions: Where and how we work will never be the same as it was. Employees as key stakeholders and the Great Resignation. Polman and Winston see advocacy as a starting point to expand the Net Positive company into building “partnership to drive systemic change”.
“ Putting your company’s purpose at the foundation of your relationships with your stakeholders is critical to long-term success.”įink also adds that “It’s never been more essential for CEOs to have a consistent voice, a clear purpose, a coherent strategy, and a long-term view.” So not only CEOs should be guided by purpose, but they need to be active advocates for it in a world where trust in institutions is at the lowest levels. Purpose is the north star and CEOs need to become advocates. Polman and Winston clearly explain that the short-term pressure on company returns with quarterly reporting has led CEOs and Boards to take decisions on choosing immediate return activities for shareholders, despite sometimes the low long-term value creation, instead of investments that could benefit stakeholders and the company in the mid or long-term, thus supporting also shareholders returns overtime. This is what also Polman and Winston clearly state in “Net Positive”. This cause and effect logic is somehow reversed versus the traditional capitalistic and financial investors thinking. The purpose of a company is to create value for its stakeholders as a base to generate profit. Shareholders’ value creation as a result, not as the driver. climate change, paying below decent wages, discrimination to name a few. This is the key for companies to finally fully embrace their responsibility, including externalities that drive massive impact and had no price so far – i.e. A key turning point to change business as a force for good for Polman and Winston is for CEOs and Boards is to move from focusing on shareholders and think about stakeholder as the wider group of people and communities impacted by a company activity: “Creating positive returns for all stakeholders” as they state it.
Blackrock ceo letter full#
Stakeholders and long term.įink writes (in bold letters) “a company must create value for and be valued by its full range of stakeholders in order to deliver l ong-term value for its shareholders”įrom shareholders to stakeholders. It is very interesting to see how many of these concepts are highlighted in Fink's letter. Recently I read a very captivating book – “Net Positive” from Paul Polman and Andrew Winston - on the deep transformative change that companies – and capitalism – would need to go through to thrive but also to survive in the “brave” new world of the challenges we face. If the title of the letter – The power of Capitalism - can sound as the same old story, reading further the understanding is that capitalism can be a force for good and Fink poses very straight forward questions to CEOs on whom they want to be. Reading the 2022 letter makes a remarkable impression, and you might think you are reading a message from one of those illuminated CEOs and business leaders that have embraced a purpose-driven and long-term company journey. BlackRock CEO Larry Fink’s 2022 annual letter to investors has been regarded since some years as a signal of how the financial world is looking at business challenges and priorities.
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