BlackRock CEO Larry Fink’s recent annual letter to CEOs holds a mirror up to leading companies around the world and challenges them to take a serious look at their purpose as organizations. From corporate governance to local community investment, Fink emphasized the importance of CSR programs that make a real impact on both financial and non-financial metrics.
Investors as key stakeholders
The recent resignation of Uber CEO Travis Kalanick following demands from Uber’s board is a recent example of the influence wielded by the investor stakeholder group. But as many board members will stress, the best strategy is to avoid crisis all together.
In his letter, Larry Fink highlighted the importance of protecting long-term investments and the need for risk management so a reputation long built is not wiped out in a single crisis. His letter gives insight into the role of investors as stakeholders and the growing list of expectations that investors have for the companies that their money supports.
“As you build your strategy, it is essential that you consider the underlying dynamics that drive change around the world. The success of your company and global growth depend on it.”
~Larry Fink, Annual Letter to CEOs
Fink goes on to outline several growing areas of concern that he sees ahead for businesses and his outlook goes well beyond just financial metrics. He recommends companies worldwide consider issues like the uneven effects of globalization, wage disparity, technology’s impact on the workforce and sustainability.
What can we learn from BlackRock?
CSR is no longer an isolated program or an annual event. Creating an organization that is transparent and helps the people and places it touches in
measurable ways is the standard of tomorrow. Companies that embrace this trend and put real programs in place will reap the benefit of stakeholder support as CSR continues to increase in its influence on corporate reputation. [Note: the CSR Pulse dimensions of Citizenship, Governance and Workplace comprise over 41% of an organizations overall RepTrak® Pulse score.]
“Managing corporate intangible assets and focusing on sustainability need to be part and parcel of any organization’s strategic agenda. Aspects other than financial indicators are being considered as crucial when assessing a company, not only by their ‘traditional’ stakeholders such a as the general public, their employees or the customers, but also for the most important investors in the world. Larry Fink is a good example of this current scenario, where factors related to transparency and ethics, well-being of the employees, contribution to society or respect for the environment are key drivers to ensure the survival of the companies.”
BlackRock Research Brief Author
Senior Advisory Manager, Spain and Latin America, Reputation Institute
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