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TheCorporateCounsel

TheCorporateCounsel.net

A basis for research and practical guidance focusing on federal securities laws, compliance & corporate governance.

DealLawyers

DealLawyers.com

An educational service that provides practical guidance on legal issues involving public and private mergers & acquisitions, joint ventures, private equity – and much more.

CompensationStandards

CompensationStandards.com

The “one stop” resource for information about responsible executive compensation practices & disclosure.

Section16.net

Section16.net

Widely recognized as the premier online research platform providing practical guidance on issues involving Section 16 of the Securities Exchange Act of 1934 and all of its related rules.

PracticalESG

PracticalESG.com

Keeping you in-the-know on environmental, social and governance developments

By now, about everyone in the investment and ESG world knows that BlackRock CEO Larry Fink’s annual letter to corporate CEOs went out last week – this year’s edition titled “The Power of Capitalism”. There have been – and will continue to be – plenty of analyses and parsing of his words similar to what happens when Berkshire Hathaway CEO Warren Buffett issues his annual letters (an event unto its own). I have mulled over Mr. Fink’s missive for a few days thinking about the best way to convey what it says. During that time Liz Dunshee wrote about it here on TheCorporateCounsel.net.

Rather than trying too hard to interpret Mr. Fink’s words as I would have done, Liz extracted key practical ESG themes for the world’s largest investment fund manager for 2022. These are:

  • stakeholder capitalism is simply capitalism. I have said for years that a company must be profitable to be sustainable, otherwise all its ESG achievements will fade away with the business and other leaders will see that as a failure and choose not to invest in ESG efforts. BlackRock also believes that stakeholder capitalism is essential for long term survival and success.
  • how are companies forging strong bonds with their employees, maintaining a positive and equitable working environment – rather than just assuming compensation is the only lever for employee happiness and retention?
  • companies need to demonstrate plans for transitioning to a low carbon economy. General climate statements and commitments won’t cut the mustard anymore. BlackRock wants to see short-, medium-, and long-term targets for greenhouse gas reductions and will apparently be reviewing the quality of plans to meet the targets. Mr. Fink has previously made clear his position that he advocates supporting transition and engaging with portfolio companies rather than divesting holdings.
  • they will soon be turning over some voting power to their clients and individual investors. You can read Liz’s earlier analysis of that announcement.
  • the launch of a “Center for Stakeholder Capitalism” – which will “bring together leading CEOs, investors, policy experts, and academics to share their experience and deliver their insights.” The hope is that this will explore “relationships between companies and their stakeholders and between stakeholder engagement and shareholder value.”

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The Editor

Lawrence Heim has been practicing in the field of ESG management for more than 35 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting at the height of regulatory development, working across a range of disciplines. He was one of the firm’s leading environmental compliance and management… View Profile