In his annual letter to CEOs, the head of the world's largest asset manager took companies to task and emphasized the need for companies to contribute to society.
"To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society," CEO Larry Fink writes in the letter. "Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate."
In the letter, Fink calls for a new model for corporate governance beyond casting proxy votes at annual meetings.
"The time has come for a new model of shareholder engagement – one that strengthens and deepens communication between shareholders and the companies that they own," he writes in the letter.
According to Fink, shareholder engagement has been too focused on annual meetings and proxy votes.
"If engagement is to be meaningful and productive – if we collectively are going to focus on benefitting shareholders instead of wasting time and money in proxy fights – then engagement needs to be a year-round conversation about improving long-term value," he writes.
Fink also acknowledges BlackRock's responsibility to help drive this change and outlined the firm's efforts to do so. BlackRock has more than $6 trillion in assets under management.
Over the past several years, BlackRock has evolved its approach – led by Michelle Edkins, global head of investment stewardship – from one predominantly focused on proxy voting toward an approach based on engagement with companies.
Fink acknowledge the need to do more, and in his letter announced that BlackRock would be expanding its investment stewardship team.
Barbara Novick, vice chair and a co-founder of BlackRock, will now oversee the firm's investment stewardship efforts, with Edkins continuing to lead the global investment stewardship group day-to-day.
