In his annual letter to fellow CEOs, Blackrock CEO Larry Fink concludes that the Environmental, Social, and Governance (ESG) movement is more relevant than ever and too big to ignore. Fink called on businesses to create and make public their plans for meeting climate objectives.
With 9 trillion under management, this statement has important implications for companies globally.
In recent years, more and more companies are embracing ESG principles as it is clear that policies are no longer a nice to have, but imperative to long-term success. For those who were not convinced, Covid-19 could be a major turning point for ESG investing as decision makers are forced to prioritise sustainability. Fink’s January letters to CEOs in portfolio companies and to clients are widely watched, and therefore are a powerful means of encouragement to businesses to do better at operating sustainably.
This sentiment also presents an exciting opportunity for environmental campaigners, who for years have felt they have been fighting a losing battle against corporate polluters. Companies can no longer pay lip service to ESG and hide a statement away in a CSR report on their website. They need to be taking tangible action and also be making a reasonable effort to disclose what actions they are taking to mitigate the risks of environmental damage. Tolerance for environmental malpractice is at the lowest it has ever been and businesses who are not monitoring their supply chain adequately, will be under increasing scrutiny. This provides a powerful opportunity for environmental grass-roots activists to expose non-compliance and apply pressure on businesses which now has the opportunity to lead to real change.
Read Larry Fink’s full statement here.