Reinforcing the Need for Long-term Purposeful Business in a Capitalist Society: Analysis of Larry Fink’s Annual Letter to CEOs

BlackRock Inc. Analysis of Larry Fink’s Annual Letter to CEOs 2022

Larry Fink, CEO and Chairman of BlackRock, published his much-anticipated 10th annual Letter to CEOs in January 2022. BlackRock is the world’s largest investment management firm and the first public asset manager to have US $10 trillion in assets at the beginning of 2022. The letter is addressed to the CEOs of the companies in which BlackRock invests, on behalf of its clients, and lays out Fink’s expectations for how these businesses are managed.

This year, Fink uses his letter as an opportunity to double down on some of the themes he has brought to the fore in the last few years. In his second letter since the pandemic started, he cites a variety of increasing and evolving pressures on business as ever more compelling reasons for CEOs to focus on creating purposeful businesses designed to create long-term value for stakeholders. He reiterates the importance of “stakeholder capitalism” throughout the letter, and makes numerous references to how the need for purposeful, long-term value creation is consistent with, and even required by, the capitalist model.

BlackRock itself has come under much scrutiny in recent years as it pushes for companies to commit to net zero while still having substantial investment in fossil fuel companies itself. Fink stands up for BlackRock’s stewardship approach over divestment, and also states a new commitment to empower its clients to get involved more actively in corporate engagement through tech-enabled proxy voting.

In this analysis, GlobeScan summarises key themes of the 2022 letter, as well as highlighting the development of themes in the letters from 2012 to 2022. Over the last ten letters we have seen a change in their focus which reflects the maturation and mainstreaming of corporate sustainability. Ten years ago, the letters were centred on the importance of strong corporate governance, external stakeholder perspectives, and long-termism. In 2018, Fink’s letter made a big splash as it led with a clear call to action for more purposeful business. Since then, Fink has focussed on making a compelling case for business commitments toward net zero. This year, he does not break new ground, but takes a slightly more defensive approach, using his letter to reaffirm the need for a stakeholder-centric, purposeful approach to capitalism, while refuting claims that this is ideological or “woke.”