BlackRock Inc. Chief Executive Larry Fink said how companies approach environmental, social and governance issues has become a defining factor for investors.
“We are seeing this reallocation of capital,” Fink said at a Bloomberg New Economy Forum event broadcast Thursday in Hong Kong.
"Those companies who are more and more focused on ESG strategies and stakeholder capitalism, they’re trying to get a higher P/E than some of the companies that are in denial,” he said.
Many companies have evolved from a primary focus on maximizing shareholder profits to one in which they also prioritize their impact on clients, employees and the communities in which they operate, Fink said in an interview with Carlyle Group Inc.’s David Rubenstein. The companies that best embrace “stakeholder capitalism” are outperforming their peers and will continue to do so, he said.
The comments mirror statements made in his annual missives to U.S. CEOs, in which he has advised corporate leaders to orient their businesses for the long term and sought to underscore that profit and social purpose are inextricably linked.
Fink made climate change the focus of his 2020 letter, saying global warming will upend global finance and promising his firm will take steps to address the issue across the thousands of companies in which it invests.
President-elect Joe Biden’s decision to return the U.S. to the Paris climate agreement will be “monumental” and would support the work of the growing number of investors that have focused on climate change, Fink said.
“It’s going to be important now to have the whole global community come together, but I would just say, over the last four years, we’ve been seeing a large transformation from private investors,” said Fink. “They’re looking for more opportunities to participate in this giant change.”
The New Economy Forum is organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
[More: BlackRock rolls out six ESG ETFs]
Beth Emswiler and Andrew Borner join as senior managing directors as the private bank widens its push for ultra-high-net-worth clients
Morningstar advisor survey finds admin work, rising client demands are offsetting efficiency gains from greater technology adoption.
Raymond James, UBS and Prime Capital Financial also announced additions as advisor recruiting stays brisk across wirehouse and independent channels
A new platform turns disputed facts into tradable markets, flipping the prediction market model on its head.
The financial advice industry has been facing inquiries into its cash sweep programs for years now.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
