Takeaway for Boards: Continuing to be mindful of geopolitical risks/exposure is critical, particularly when considering how a “think local” mentality may impact strategy and operations. This fragmentation of the economy brings risks, but also opportunities, and North American may be the biggest beneficiary given the large labor force and abundant natural resources with the potential for both energy and food security. Global Economyįink states that recent global events (COVID-19 pandemic, Russia/Ukraine war) have resulted in companies and countries looking to ensure they are not dependent on supply chains exposed to geopolitical tensions, resulting in a more fragmented global economy. As it relates to executive pay decisions, this may require thoughtfulness in the process to set targets and evaluate performance, particularly for financial metrics, recognizing companies will be impacted differently based on their industry. Takeaway for Boards: Reprieve from inflation is unlikely to occur in the near future, and while this may create opportunity for the private sector, Boards will need to continue to be mindful of the impact of inflation/monetary policies. After years of growth being driven by government spending and low interest rates, Fink notes the world now needs the private sector to grow economies, and that leaders in both government and corporations need to work together to unleash the potential of the private sector. Liquidity mismatches as years of lower rates drove some asset owners to trade lower liquidity for higher returnsįink believes today’s banking crisis will place greater emphasis on the role of capital markets, and he expects governments will stay focused on fighting inflation and continue to raise rates. Fink highlights three consequences/potential consequences of years of “easy money”:Īsset-liability mismatch (i.e. Since the financial crisis of 2008, the markets have been defined by aggressive fiscal and monetary policy and subsequently in recent years we have experienced inflation at levels not seen since the 1980s. The Consequence of Easy Money & Regulatory Change Board’s should remain focused on this simple concept, especially in complex strategic discussions. Takeaway for Boards: A continued focus on the best long-term interests of the corporation’s stakeholders (including shareholders and employees) should naturally drive long-term value creation. Blackrock’s scaled model and its diversity in investment offerings that are centered on empowering clients has resulted in it being the highest-performing financial services stock in the S&P 500 since their IPO in 1999. Trust & Fiduciary Dutyīlackrock’s CFO refers to dollars invested with Blackrock as “units of trust” that belong to their clients, and their fiduciary duty to their clients is central to everything they do. This article provides a summary of themes from the 2023 letter and provides our perspectives and key takeaways for consideration. While ESG clearly remains an imperative for Blackrock, the tone of the letter shifts towards the broader sentiment that ESG strategy is an important part of business strategy and that climate risk is investment risk There were two notable differences in Fink’s approach to the letter for 2023:įink has issued one letter this year to all stakeholders as he states we (shareholders, investors, corporations, government, etc.) are all in this together and will need to work together on big global issues Larry Fink’s annual Letter to CEOs has become an anticipated dispatch that sets the tone for the upcoming proxy season, and this year’s edition is no exception.
0 Comments
Leave a Reply. |