Morningstar Magazine - April/May 2018 - 56
Investors
I think all of that is starting to become clear
in people's minds, and what's probably
putting momentum behind it is this enormous
concentration of economic activity on
the corporate side. The largest companies in the
world keep garnering a larger and larger
percentage of revenues, so they control the world
through their supply chains. Then there's
increasing concentration in the asset manager
world that's also contributing.
You mentioned that corporations have been
ahead of investors on sustainability issues.
Was Larry Fink's letter last month to CEOs a signal
that BlackRock BLK is now thinking more at the
system level?
Eccles: BlackRock has been an advocate
of good governance sustainability with companies
for a while. I do think that the line [in the letter]
that says that a company also has to serve
society, has to have a purpose, is crossing
the Rubicon. When you start talking about purpose,
you change the frame from "companies exist
to make money for shareholders" to "companies
exist to serve a purpose." If they do that
well, then they'll make money for shareholders
as a consequence of that.
BlackRock is a publicly listed company. Are
they going to eat their own cooking? What is it
that BlackRock should be doing as a public
company for Larry to follow his own advice? It's
one thing for the CEO to say something. You've got
all these experts and specialists and analysts
and portfolio managers and product developers at
BlackRock. How this vision of purpose gets
implemented in their $6 trillion or $7 trillion of
assets under management remains to be seen.
Anna Snider: Fink has been writing for a long
time about long-termism. He, along with a number
of CEOs who are part of CECP2 and similar
organizations, have been talking about financial
systemic risk based on this predominance
of short-termism. Everyone, from the individual
investor to the CEO, makes decisions based on
short-term thinking, on a quarterly basis, and that
is affecting the stability and the health of the
financial markets.
Fink has been writing letters to CEOs very
openly for a number of years now, but I think this
letter marked a change in how corporations
see themselves, and I think in how BlackRock also
sees itself. BlackRock, through its iShares
business, is one of the largest passive investors
in the world. When you are forced to hold a
set of securities in a benchmark, you're not pulling
2 CECP is defined at its website as "a CEO-led coalition that believes a company's social strategy-how it engages with key stakeholders including employees, communities, investors, and
customers-determines company success." www.cecp.co.
56
Morningstar April/May 2018
http://www.cecp.co
Table of Contents for the Digital Edition of Morningstar Magazine - April/May 2018
Contents
Morningstar Magazine - April/May 2018 - Cover1
Morningstar Magazine - April/May 2018 - Cover2
Morningstar Magazine - April/May 2018 - 1
Morningstar Magazine - April/May 2018 - 2
Morningstar Magazine - April/May 2018 - Contents
Morningstar Magazine - April/May 2018 - 4
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