Shifting the Narrative in a Polarized World: Analysis of Larry Fink’s 11th Annual Letter to CEOs

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

The 11th annual Letter to CEOs from Larry Fink, CEO and Chairman of BlackRock, was published on 15th March 2023 in a departure from the January slot the Letter had been following for the past few years. One of the reasons for the delay of the Letter which usually sets the tone for investors is the fact that there are no separate Letters for CEOs and investors this year. At the outset, Fink sets the context that since shareholders, clients, employees, partners, communities, and companies are facing similar issues, he has written just the one Letter for all stakeholders.

BlackRock is the world’s largest investment management firm and the first public asset manager to have close to US $9 trillion in assets under management at the end of 2022. This year marks the 35th anniversary of the founding of the firm. The Letter begins with highlighting the value it has created for its shareholders, dwarfing the returns of key stock market indices since its IPO 24 years ago.

This year, Fink uses his Letter to highlight the pitfalls of chasing easy money and the impact of regulatory changes given that it was published just a week after the failure of Silicon Valley Bank. He reiterates the importance of building a safe future for retirees while navigating critical areas like energy transition and the rapidly changing face of the global economy.  

BlackRock has been under the radar politically with major ESG backlash in the US and in the Letter, he subtly points out that while people may have opinions on how to manage their clients’ money, it is eventually BlackRock’s fiduciary duty to do what is best for long-term value creation. He emphasizes the need for advocating on behalf of clients and the importance of encouraging people to invest with a long-term perspective while being aware of the risks and potential benefits that each money-making opportunity presents.

In this analysis, GlobeScan summarizes key topics of the 2023 Letter as well as highlights the evolution of themes in the Letters from 2012 to 2023. Over the last 11 Letters, we have seen a change in their focus which reflects the maturation and mainstreaming of corporate sustainability. Eleven years ago, the Letters were centered 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, the focus has shifted away from the previous themes of ESG and sustainability in the face of anti-ESG backlash and rising polarization in the USA (there is no explicit mention of the term “ESG” at all in the Letter and the word “sustainability” is mentioned only once) to building trust and identifying risks and opportunities to be future-ready.