Every year Larry Fink, CEO of the world’s largest asset management company BlackRock, writes an open letter to CEOs around the world. For the past two years the subject of his letter was about purpose. As we enter the 2020s what would be his first message of the new decade? Our Los Angeles-based purpose consultant Justin Lee gives his take on the letter.


 

Parallel to BlackRock’s new sustainability initiatives, this year’s letter kicks off with how climate change plays an important role in the long-term value creation of companies. He emphasizes, “Every government, company, and shareholder must confront climate change.”

 

Solving the climate change crisis is just one of responsibilities of corporations. Larry Finks highlights diversity, supply chain sustainability, customer data privacy as examples that companies need to be active and transparent about. All this leads up to a powerful follow up of his previous letters – a reemphasis of the importance of embracing purpose for companies to achieve long-term profits. He adds, “Ultimately, purpose is the engine of long-term profitability.”

 

The letter calls for action. Companies are expected to be transparent and clearly communicate their plans and progress on social and environmental issues. If they do not, as Larry Fink closes the letter, they will hold the company responsible and “will be increasingly disposed to vote against management and board directors.”

As we transition into a new decade this letter signals more positive change to come. And that’s good news.

 

(Justin Lee)