BlackRock CEO takes stock of pandemic, diversity challenges

In the spotlight over racial and gender discrimination challenges, BlackRock is focused on "rooting out misconduct" as it simultaneously confronts a year of hardships wrought by the pandemic, its CEO said Wednesday in his annual letter to shareholders.

Laurence D. "Larry" Fink, who also serves as BlackRock's chairman, described himself as an optimist despite "immediate and pressing matters such as economic relief and vaccination rollout to address."

"More than 13 months after COVID-19 became a global health crisis, we are still confronting its impacts daily and have yet to return to normalcy," Mr. Fink said. "For billions of people around the world, the pandemic has brought on hardships — physically, emotionally, mentally and financially."

BlackRock itself is undergoing some internal turmoil after recent reports about racial and gender discrimination and harassment within the firm surfaced.

Mr. Fink addressed the issues noting that BlackRock's high-performance culture "requires diversity, empathy, equity, respect and inclusion. I know our culture is not perfect. It depends on the contribution of 16,500 individuals."

"In some cases, certain employees have not upheld BlackRock's standards," he said. "Rooting out misconduct — and ensuring an environment that doesn't allow it — is critical to building the culture we all aspire to and ensuring everyone can experience BlackRock at its best."

Mr. Fink said the company is "taking a number of actions internally to promote an environment of respect and inclusivity and making enhancements to our processes for investigating employee complaints."

"At the same time, we have retained an external law firm to conduct a review of recent reports of employee-workplace matters and to provide recommendations on how we might further advance our processes and procedures," he said.

He also stressed to shareholders that "just as we ask of other companies, we have a long-term strategy aimed at improving diversity, equity and inclusion (DEI) at BlackRock. Our goal is to build, develop and retain a diverse talent pipeline while fostering a culture where everyone feels seen, heard and empowered to thrive."

Further, he said that "to truly drive change, we must embed DEI into everything we do. Advancing a more equitable and inclusive environment begins by examining our own culture and talent practices, but we cannot be content to stop there. Our global strategy aims to advance DEI holistically."

Mr. Fink reminded shareholders that since BlackRock's 2009 acquisition of Barclays Global Investors, investors in more than 100 countries invested $1.7 trillion of net new assets and total assets under management swelled to $8.7 trillion as of Dec. 31, a record high, from $3.3 trillion that year. He added that BlackRock stock "delivered nearly 400% total return for our shareholders over the past decade, exceeding peers and broader markets" in the decade ended Dec. 31.

Among bright spots in 2020, Mr. Fink highlighted the utility of the firm's Aladdin investment platform to work with BlackRock clients and assisted more than 250 third-party Aladdin clients, including asset managers, asset owners, banks and insurers to "operate seamlessly" during the pandemic.

Mr. Fink reiterated his environmental mantra to shareholders in his letter.

"Blackrock's commitment to sustainability is embedded across our business because our deeply held investment conviction is that integrating sustainability can help investors build more resilient portfolios and achieve better long-term, risk-adjusted returns. That is why we have made sustainability integral to the way we manage risk, generate alpha, build portfolios and pursue investment stewardship."

Among other growth areas Mr. Fink wrote that "by accelerating growth in iShares, illiquid alternatives and technology, keeping alpha at the heart of BlackRock and being a global leader in sustainable investing, BlackRock is uniquely positioned to provide whole-portfolio solutions for clients. This is leading to deeper and more comprehensive relationships with more clients and we believe will enable us to continue to deliver on our 5% organic base fee growth target."

Another BlackRock aspiration is to address what Mr. Fink termed the "silent crisis of retirement" given that in the U.S., almost 50% of households age 56 and older have no retirement savings. In other countries, meanwhile, retirement systems are inadequate and can't cope with the need to accommodate rising wealth creation or the challenge of providing benefits for aging populations.

Mr. Fink said the firm is "committed to building more intuitive, resilient retirement solutions so more people can save for retirement. We are working with governments and the private sector across dozens of countries to provide our retirement system expertise, insights, products and services."

Regarding overseas retirement systems, Mr. Fink said "the Chinese market represents a significant opportunity to help meet the long-term goals of investors in China and internationally. It also provides us an opportunity to help address the challenge of retirement for millions of people in China."

More personally, Mr. Fink said that although technology has made it easier work remotely and to connect with people around the world, he misses "the personal connections and unexpected ideas that come from meeting face-to-face and sharing a meal together. It's often through a less-structured conversation that one can have on a video call that we learn (the) most about each other and experience intangibles, like culture, that are hard to see through a screen."

He added that more than ever before "the events of this past year have only further strengthened our sense of responsibility to help millions of people invest to build savings, make investing easier and more affordable, advance sustainable investing and contribute to a more resilient economy."