12/13/2023 0 Comments Larry fink letter to ceos 2020But as always, the devil is in the detail-there are presently seven methods for calculating this statistic. Some European investment firms have already started reporting such a metric. Secondly, Fink makes a commitment to publishing a “temperature alignment metric” for public equity and bond funds.Īlso referred to as an “implied temperature rise” or “portfolio warming potential,” this metric gives an indication of a portfolio’s aggregate global warming trajectory, which can be used to evaluate how well a portfolio is doing in staying within an allowable carbon budget that conforms to a bigger-picture net-zero transition plan. It remains unclear whether this list will be publicly disclosed and the laggards named ahead of their respective shareholder meetings. So how does Fink’s 2021 letter depart from previous years, and in what ways does it commit BlackRock to using its $8.7 trillion capital market influence to “confront the global threat of climate change”?īelow are five points from both the CEO letter and the companion client letter, called " Net Zero: A Fiduciary Approach," that stand out to us.įirstly, the companion letter-the one sent to BlackRock clients-commits to "increasing the role of votes on shareholder proposals in our stewardship efforts around sustainability." At the end of 2020 BlackRock reports already having supported half of the 22 shareholder proposals voted in the second half of 2020.įurthermore, the letter commits BlackRock to a more-formalized climate engagement strategy, identifying carbon-intensive companies that risk voting action where significant progress is not made toward increased transparency, as well as being flagged for potential exit from discretionary active strategies. Morningstar’s proxy voting data shows that between 2016 and the close of the 2020 proxy season, the asset manager’s funds had supported only 10 of 165 climate change resolutions voted at U.S. One area where BlackRock lost points was its ESG proxy voting record. But it was also an effort to catch up to global rivals that have more thoroughly inculcated ESG standards in their investment processes, operations, and cultures." The world's largest money manager's vow could prove to be a turning point for the industry-a sign that investment firms can no longer ignore ESG risks. "BlackRock in January 2020 declared its desire to augment and extend its existing ESG efforts throughout its organization. Members of this category were strong in some areas and weak in others. BlackRock was among 40 asset managers evaluated and was assigned a “Basic” level, meaning it ranked third-tier in a four-tier ranking system. In November 2020, Morningstar published the first round of a new asset manager ESG Commitment Level evaluation based on an analysis of how intentionally an asset manager incorporates ESG factors into their investment processes and organizations. However, this strident tone hasn’t altogether squared with BlackRock’s investment approach. While stopping short of calling it "stakeholder capitalism," the vision he articulates over the following three letters clearly goes beyond the prevailing "shareholder primacy" model of governance. The term "purpose" appears for the first time in Fink's 2018 message. BlackRock voted for shareholder resolutions at Exxon XOM and Occidental OXY that asked the companies to report on the business risks of a low-carbon policy scenario. Fink earned an MBA from the University of California at Los Angeles (UCLA) in 1976 and a BA from UCLA in 1974.In 2017 BlackRock cast its first vote in support of climate resolutions that management had opposed. He also serves on the Advisory Board of the Tsinghua University School of Economics and Management in Beijing and on the Executive Committee of the Partnership for New York City. In addition, he serves on the boards of the Museum of Modern Art, the Council on Foreign Relations and the International Rescue Committee. He serves as a member of the Board of Trustees of New York University (NYU) and the World Economic Forum, and is Co-Chairman of the NYU Langone Medical Center Board of Trustees. Fink was a member of the Management Committee and a Managing Director of The First Boston Corporation. BlackRock's mission is to help our clients build better financial futures and the firm is trusted to manage more money than any other investment company in the world. He and seven partners founded BlackRock in 1988, and under his leadership, the firm has grown into a global leader in investment and technology solutions. Fink is Chairman and Chief Executive Officer of BlackRock.
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