From Governance to Purpose to the Fundamental Reshaping of Finance: Analysis of Larry Fink’s Annual Letter to CEOs

BlackRock Inc. Analysis of Larry Fink’s Annual Letter to CEOs

Since 2012, Larry Fink, Chairman and CEO of BlackRock – the world’s largest asset management company, overseeing $7 trillion worth of investments – has sent out an annual letter to CEOs of the companies that BlackRock invests in on behalf of its clients.

As we start a new decade, Fink’s 2020 letter takes a strong tone from the outset, with the title “A Fundamental Reshaping of Finance.” The letter appears to be smashing the records of its previous counterparts in terms of reach and action.  And the principle message of the letter is clear: the risks that climate change poses to the world of finance can no longer be ignored.

BlackRock’s annual CEO letters have become a rallying cry for responsible long-term business strategy. The events of 2019 – not least the actions of Extinction Rebellion and the climate youth movement – coupled with criticism of Fink’s 2019 letter for not being backed up by BlackRock’s own behavior meant that a climate change focus this year was inevitable.

In the analysis presented here, GlobeScan traces the emergence and evolution of central themes in the letters from 2012 to 2020. This helps us better understand the shifting expectations for business and the extent to which purpose, stakeholder engagement, sustainability and particularly climate change are becoming more mainstream aspects of management. ​

Our analysis tracks the changing outlook, from the fiduciary imperative of good governance, to a societal obligation for purposeful leadership to this year’s demand for action on climate change, in the context of significantly restructured capital flows.