Larry Fink – the Chair and CEO of BlackRock – pens an annual letter to investors that is closely read, but has been even more under the microscope the past few years due to BlackRock’s unenviable position of being in the middle of the political debate over ESG. Larry’s latest annual letter to investors is now available – and here are four things to note:
- ESG Barely Mentioned – ESG is still mentioned in the letter but far less than a few years ago. There is a reference to BlackRock being a leader in sustainable investing and a mention of BlackRock’s involvement in ESG-oriented projects. That’s pretty much it (other than the “energy infrastructure” reference noted in #4 below).
- Heavy “Retirement Security” Theme – This year’s letter has a theme of retirement planning. That the capital markets plays a key role in helping us all plan for our retirement. That all of us should be more educated – and more engaged – in our own retirement planning. “Voting Choice” and BlackRock’s efforts to pass through proxy voting to its clients is part of this theme.
- Voting Trends Will Likely Continue – Reading this letter gives me reason to believe that BlackRock will continue last year’s trend of being more company-friendly when it comes time to cast its votes for annual shareholder meetings. That doesn’t necessarily mean that ESG will go away during engagement with companies ahead of these meetings, but it probably means that ESG shareholder proposals will continue to garner lower levels of support compared to a few years ago.
- Infrastructure Development and Global Growth Also Important – In addition to retirement security, this year’s letter also addresses the importance of more infrastructure development and global growth. The letter does note, “in my nearly 50 years in finance, I’ve never seen more demand for energy infrastructure.”
Here’s another excerpt about infrastructure: “In private markets, we are prepared to capitalize on structural growth trends. Whether it’s executing on demand for much-needed infrastructure, or the growing role of private credit as banks and public lenders move away from the middle market, private capital will be essential. BlackRock is poised to capture share through our scale, proprietary origination, and track record. And we believe our planned acquisition of GIP will meaningfully accelerate our ability to offer our private markets capabilities to our clients.”
And here’s an excerpt related to global growth: “In this letter, I’ve shared my view that the capital markets are going to play an even bigger role in the global economy. They’ll have to if the world wants to address the challenges around infrastructure, debt, and retirement. These are the major economic issues of the mid-21st Century. We’re going to need the power of capitalism to solve them.”
