Stakeholder capitalism is not about politics or being ‘woke’ mutually beneficial relationships to help firms prosper, according to BlackRock chief executive, Larry Fink.
In a letter to CEOs, Fink said stakeholder capitalism was not about social or ideological agenda.
“It is not ‘woke’. It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism,” he wrote.
Fink noted the next 1,000 unicorns would be startups that helped the world decarbonise and made the energy transition affordable for all consumers and that BlackRock focused on sustainability note because it was environmentalists but because it was capitalists and fiduciaries to its clients.
“That requires understanding how companies are adjusting their businesses for the massive changes the economy is undergoing. As part of that focus, we are asking companies to set short-, medium-, and long-term targets for greenhouse gas reductions,” he said.
“These targets, and the quality of plans to meet them, are critical to the long-term economic interests of your shareholders. It’s also why we ask you to issue reports consistent with the Task Force on Climate-related Financial Disclosures (TCFD): because we believe these are essential tools for understanding a company’s ability to adapt for the future.”
Fink noted that people were rethinking their relationships with companies as shareholders and there was growing interest in the corporate governance of public companies.
Fink announced that BlackRock would be launching a Centre for Stakeholder Capitalism to create a forum for research, dialogue, and debate to learn about a company’s relationship with stakeholders impacts long-term value.
“It will help us further explore the relationships between companies and their stakeholders and between stakeholder engagement and shareholder value. We will bring together leading CEOs, investors, policy experts, and academics to share their experience and deliver their insights,” he said.
“In this polarized world, CEOs will invariably have one set of stakeholders demanding that we do one thing, while another set of stakeholders demand that we do just the opposite.
“That is why it is more important than ever that your company and its management be guided by its purpose. If you stay true to your company’s purpose and focus on the long term, while adapting to this new world around us, you will deliver durable returns for shareholders and help realise the power of capitalism for all.”
