BlackRock’s Larry Fink: Money managers must help companies focus on long-term thinking
Geopolitical uncertainty, created in part by Brexit and the U.S. presidential race, is leading to “intense short-termism,” he says.
Laurence D. Fink, chairman and CEO of BlackRock (BLK), is continuing to advocate the value and importance of companies engaging in long-term thinking.
At an event Wednesday sponsored by FCLT Global, an independent non-profit organization advocating long-term investment practices, Mr. Fink told attendees that money managers can play a dampening role on short-termism.
“We have to become more engaged,” Mr. Fink said. “The days where managers are passive in their activity are behind us.”
He explained that money managers needed to become more involved, and not only with the companies in which they invest.
Mr. Fink has been an advocate of companies focusing on long-term value creation for years. Earlier this year, he wrote a letter to the CEOs of all S&P 500 companies explaining that many companies engage in practices that undermine their ability to invest in long-term growth. This was the third letter of its kind he had written, he said.
“It is incumbent upon companies to be more transparent,” he explained at the FCLT Global event. They also have to divulge what their 10-year plan is, he said.
“If you can illustrate your long-term strategy, we (as fiduciaries) will have a better idea of where you’re taking the company,” Mr. Fink said.
He added that the long-term strategy should be seen as a benchmark, not as a finish line that companies should barrel toward no matter what happens over the next 10 or 20 years.
Mr. Fink also noted that a good deal of geopolitical uncertainty, created in part by Brexit and the U.S. presidential race, is leading to “intense short-termism” among a number of companies. These events, among others, are making it difficult for companies to create and stick with a long-term strategy.
“We intensely need government to focus on long-termism,” he said. “And if they do, I believe corporations will follow suit.”
This report first appeared in Pensions & Investments
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