It gives him both a chip on his broad shoulders and an ear for populist politics.įink started BlackRock in 1999 after being fired from First Boston for a 100-million-dollar lousy bet. A Californian, a Democrat, and a (former) failure. He is also three things most Wall Streeters are not. If Fink hired Gordon Gekko instead of PR flacks, he might have said it this way: “The point is, ladies and gentleman, that greed, for lack of a better word, may have been good in the past, but in today’s world, if you add purpose, it gets even better.”įink is a billionaire, like many on Wall Street. If you believe, as I do, that we are in the middle of a quiet, bloodless revolution (so far), you’ll take his message to heart despite his implicit sermonizing. And Warren Buffett, the chairman of Berkshire Hathaway, said: “I don’t believe in imposing my political opinions on the activities of our businesses.”Īlthough Fink’s letter does have a Ben Franklin-like tone, the message is bold and heretical, and better than its sodden prose. They don’t need Fink to tell them where to buy their indulgences, as Medieval kings used to do.Īccording to Andrew Ross Sorkin’s DealBook, “I didn’t know Larry Fink had been made God,” said real estate billionaire Sam Zell. His 2019 letter admonishing CEOs to start thinking beyond their bottom lines led Barron’s to call him “the new conscience of Wall Street.” But business bosses from Warren Buffett to Sam Zell pushed back hard. Larry Fink, founder and chief executive of the world’s largest money manager, is freaking out. Now, the Blackrock CEO says that’s not good enough for the millennial generation. They are also, in record numbers, voting their proxies in favor of ESG-related proposals at company meetings.From Milton Friedman to Warren Buffett, profits have been the driving force behind business. Most sustainable investors, and an increasing number of investors who don't use any of these other approaches, are using direct engagement with companies to urge improvement on ESG performance and a greater focus on long-term value creation. A strategy may focus on including companies with positive or net positive societal and environmental impacts. A sustainable strategy may favor companies with better-or best-ESG practices relative to their industry peers, regarding them as promising long-term investment opportunities. Some may exclude or be underweight in companies that have high levels of material ESG risks or purchase them only if the ESG risks are priced into the stock. Some may exclude firms lacking a positive social purpose. Another way of saying that, for equity investing in particular, is to say that sustainable investing is a set of investment approaches intended to produce competitive investment returns and promote stakeholder capitalism.Įach sustainable investment approach promotes stakeholder capitalism in its own way. In the Morningstar Sustainable Investing Framework, we define sustainable investing as a set of investment approaches that seek to deliver competitive financial results while also driving positive environmental, social, and corporate governance outcomes. Sustainable investing is closely connected with stakeholder capitalism. Just as investors played a key role in the shareholder-primacy era, with an obsessive focus on short-term performance, they will also play a key role in the transition to the stakeholder capitalism era. The 21st century, so far, has proved to be a challenge to so-called shareholder primacy, and perhaps it will be its undoing. Systemic issues like the global financial crisis, climate change, and growing inequality have led to an increasing realization that a singular focus on shareholders may be causing problems like these or making them worse. Maximizing quarterly earnings may have created a lot of value for shareholders, as intended, but perhaps not for other corporate stakeholders: customers, employees, communities, and the planet itself.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |