Evolving letters with a “sting” in the tail

 We published our first article on BlackRock Chair and CEO Larry Fink’s letters to CEOs and investors (some years combined into one) in the January 2020 Boardroom magazine. We highlighted Fink’s ideas on company purpose and moving to a wider focus on shareholders and away from shareholder primacy.

2020 was an inflection point in Fink’s letters, which he began publishing in 2012.

In 2019, international analytics firm, GlobalScan, traced the evolution of Fink’s letter from 2012 through to 2019. The firm mapped this with levels of interest in those themes as outlined below:

GlobalScan highlights that a focus on the “long term” is an ongoing, central feature of Fink’s letters. This isn’t that surprising for someone in charge of one of the largest pension and fund managers in the world. It’s also comforting for those with funds invested where the evidence suggests longer-term investment yields better returns than shorter term “playing the market”. 

The 2021 and 2022 letters to CEOs continued the themes identified and focused on climate change, societal issues and the importance of good practice governance.

2023’s letter to Investors saw the focus change with the letter no longer addressed to CEOs. We commented last year that the slightly delayed single letter to investors “…reflect[ed] Fink’s view that the issues facing BlackRock shareholders, clients, partners, communities BlackRock operates in and companies in which it’s invested are largely the same.”

The 2023 letter emphasised investor choice, governance and a longer-term perspective. It was less focused on climate change, the environment, and social issues while suggesting that investors could choose to invest in funds with this focus.  It was up to them.

Investor choice has continued in Fink’s most recent letter most recent letter to investors published in April 2024. Fink makes a compelling case for well-managed pension and managed funds as part of a vibrant capital market, particularly with an aging population trend, but has continued to scale back on the risks of climate change, other environmental pressures and societal issues.

These conflicting pressures on Fink and BlackRock are now more evident than ever.

On one side, Republican states in the United States, including Texas, have stopped investing pensions and other funds with fund managers such as BlackRock. BlackRock has stressed to the Texas government that it does invest in energy companies, including those producing fossil fuels. Fink reinforces this in his two most recent letters with the focus on investors choosing whether to invest in these funds based on their preferences for areas of investment.

At the same time, activist investors such as Bluebell Capital are putting pressure on BlackRock to live up to the statements in Fink’s earlier letters and follow his own advice on good practice governance. The latter includes supporting a proxy vote to have Fink step down from one of his combined CEO or chair roles. Watch this space!