- BlackRock’s CEO Larry Fink sent his annual shareholder letter on Wednesday.
- The letter offers a glimpse into BlackRock’s corporate purpose.
- Communication experts and a business school professor dissected his letter and shared what works.
- See more stories on Insider’s business page.
On Wednesday, BlackRock CEO Larry Fink sent out his annual letter to shareholders, giving us an inside look at the firm’s goals. BlackRock is the world’s biggest asset manager, with $8.7 trillion assets under management.
In the letter, Fink reflects on the events of the past year. He called on the government to play an active role in achieving a net-zero economy by removing the same amount of greenhouse gas that we’re producing, reiterated BlackRock’s commitments to become a driving force in the retirement and sustainability space, and acknowledged that the firm needs to boost diversity, equity, and inclusion.
Shareholder letters, like Fink’s, can give you a better sense of a leader’s long-term thinking, said Gregory Miller, a professor at University of Michigan’s Ross School of Business and a researcher in investor relations.
“Now companies are being asked to play a larger role in society, and these letters are a way for CEOs to communicate their broader vision and strategy for the firm,” Miller said.
But these letters are also hard to perfect. Only a handful of high-profile CEOs, such as Berkshire Hathaway’s Warren Buffett and JPMorgan’s Jamie Dimon, still manage to write insightful shareholder letters.
Insider spoke with Miller and LaToya Evans, a communications and PR expert who’s worked with corporations like IBM and Bank of America, to get their thoughts on Fink’s letter. They shared what worked and what didn’t.
He reminds shareholders of BlackRock’s long-term mission.
Fink’s letter is effective because he’s showing progress toward achieving BlackRock’s long-term goals, Miller said.
Consistency is incredibly important in financial communications, because it gives outsiders a clear sense of who you are as a company, he added. If you’re constantly changing your objective or your long-term goals, outside stakeholders are going to have a hard time deciding whether they’d want to invest in you.
For example, BlackRock has been working to get more people to invest in retirement savings. In 2018, it partnered with Microsoft to build a product that aimed to make retirement saving as easy as calling an Uber. In this year’s letter, Fink noted nearly 50% of Americans have no retirement funds, and he announced further commitments to address the crisis.
BlackRock’s commitments to sustainability, and environmental, social and governance (ESG) factors aren’t new either. Fink has been discussing this his letters to clients, CEOs, and shareholders for years, Miller added. In this year’s memo, the executive urged government bodies to play a bigger role.
“Every level of government working in partnership with the private sector is required to ensure a just transition that protects people’s livelihoods, vulnerable communities and developing nations,” he wrote.
“He’s basically showing you the evolution of his company,” Miller said. “From his standpoint, the company is still headed toward the same direction. If you read through all of his letters, you’d be able to see how far BlackRock has come, and progress they made each year to get to where they are.”
He holds the company accountable.
In recent weeks, BlackRock faced several allegations of harassment and discrimination from former employees, Insider previously reported. Fink’s annual letter comes amid a push for more DEI in corporate America. He acknowledged that there are aspects of BlackRock’s culture that need improvement and created an action plan to boost DEI.
“I know our culture isn’t perfect,” Fink wrote. “It depends on the contribution of 16,500 individuals. And in some cases, certain employees have not upheld BlackRock’s standards. I have made it clear to employees that we want to know when that happens, and those individuals don’t have a place at BlackRock.”
Aaron Chatterji, a communications expert and professor at Duke University’s Fuqua School of Business, previously said that CEOs should think hard before they publicly speak out on social issues. He said leaders should ask themselves,”Can you look internally and commit to make some actions that are in the spirit of what you’re calling for others to do?”
Evans said one of the strongest aspects of the letter included the hiring of an external law firm to review recent reports of employee-workplace matters.
“Actions always speak louder than words,” Evans told Insider. “And in the memo, Fink explains the actions he’s taken to produce better business and societal outcomes for his stakeholders.”
He could be more specific.
Some initiatives mentioned in the letter lacked clarity — especially for the firm’s reopening plans, Miller said.
In his letter, Fink shared there are more than 400 graduate program analysts who have never set foot in the office, and that he’s looking forward to face-to-face interactions with clients and colleagues. But there’s no action plan for how a hybrid work environment and remote work might affect the company’s culture, Miller said.
Miller also suggested Fink share operational steps on achieving a positive work culture or revealing a timeline for DEI strategies to make the letter stronger.
Evans said she thinks the letter is long, but the issues he addresses are lengthy and complicated in nature.
“The letter specifically sites global data and our changed environment both personally and professionally in the face of a global pandemic, and he takes the time to clearly and honestly reflect on it,” she said.
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