Companies must re-establish traditional role in retirement planning
The world needs the leadership of public company CEOs to ameliorate the impacts of social and political problems, BlackRock (BLK) Chairman and CEO Laurence D. "Larry" Fink said in his annual letter to corporations in which the firm invests.
In a Jan. 15 letter obtained by Pensions & Investments, Mr. Fink wrote: "Unnerved by fundamental economic changes and the failure of government to provide lasting solutions, society is increasingly looking to companies, both public and private, to address pressing social and economic issues."
Those issues include protecting the environment, gender and racial inequality, and retirement, Mr. Fink said.
Mr. Fink said that as a CEO of a publicly held company himself, "I feel firsthand the pressures companies face in today's polarized environment and the challenges of navigating them. One thing is certain: the world needs your leadership," Mr. Fink stressed to fellow CEOs.
Companies need to show commitment to the countries and communities where they have operations, especially on issues vital to global prosperity such as retirement, preparing workers for jobs of the future and infrastructure, Mr. Fink wrote.
For example, Mr. Fink said retirement adequacy is an area in which companies must "re-establish their traditional leadership role," stressing they "must embrace a greater responsibility to help workers navigate retirement, lending their expertise and capacity for innovation to solve this immense global challenge."
As part of global leadership, Mr. Fink drew the attention of the CEOs in his audience to the importance of "a clear embodiment of your company's purpose in your business model and corporate strategy," a factor he stressed in his 2018 letter.
"Purpose is not a mere tagline or marketing campaign; it is a company's fundamental reason for being, what it does every day to create value for shareholders," he said.
The importance of a corporation's purpose will "continue to accelerate as millennials — who represent 35% of today's workforce — express new expectations of the companies they work for, buy from and invest in," Mr. Fink opined.
The millennial generation's sentiments about environmental, social and governance issues will drive their investment decisions and become "increasingly material to corporate valuations," when an aggregate $24 trillion of wealth is transferred from baby boomer parents to their children, Mr. Fink wrote.
Mr. Fink said BlackRock's investment stewardship team has been talking with public companies about corporate purpose and the way it is aligned with a firm's culture and corporate strategy, noting that "we have been encouraged by the commitment of companies to engaging with us on this issue."
Mr. Fink outlined BlackRock's 2019 corporate engagement priorities in his letter: governance, including board diversity; corporate strategy and capital allocation; compensation that promotes long-termism; environmental risks and opportunities; and human capital engagement.
BlackRock managed $5.976 trillion as of Dec. 31.