An Open letter to Larry Fink: How Your CEO Letter Misses the Point

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Dear Larry, 

Your 2021 annual CEO letter to all CEOs in the BlackRock portfolio was an eloquent statement articulating the existential issues confronting the entire economy and global society. What it lacks is an implementation plan. You are like a firefighter, standing in front of a burning house with a fully charged fire hose in hand, describing the conflagration in exquisite detail. Then asking all of us to go find a bucket and form a bucket brigade. 

As I read the letter I wondered, how does a person who has spent his entire life amassing so much power fail to understand how to use it to solve the very problems you have identified? 

As CEO of the non-profit advocacy organisation As You Sow, I have tried to help you catalyze change by filing a shareholder resolution asking how BlackRock plans to implement your commitment to Business Roundtable New Purpose of a Corporation and the idea of stakeholder capitalism. At the 2020 Annual General Meeting, I asked you “how do words become actions?” and for an implementation plan. Your response? “We are fully implemented.”

Unsatisfied, as BlackRock continued to vote for nearly every egregious CEO Pay package and against the vast majority of climate shareholder resolutions, we refiled the resolution and your legal team responded with a no-action request at the SEC to try and silence our voice. Given this aggressive action, it occurred to me that perhaps you seek further clarification of our intent. With that goal in mind, I offer a few suggested tweaks to your CEO letter to demonstrate how BlackRock can move beyond suggestions into action.

I appreciate the dialogue my team has had with your staff, who informed us that you convened the BlackRock Board of Directors to discuss our resolution. However, your boards’ simple parroting of your statement that BlackRock is “fully implemented,” without providing details, is again not satisfactory. 

My mark-up of your CEO letter provides guidance on what we are hoping to see. The changes are simple. We clearly agree on the conceptual framework of the problem. What is missing is an action plan describing how these concepts will be implemented. You can choose to use the power of Blackrock’s brand to make material changes that will have a profound and rapid impact, bringing climate change, racial injustice and other pernicious issues to a swift solution. If your letter were adjusted, as I suggest, As You Sow would gladly withdraw our resolution, secure in the knowledge that you have a robust implementation plan in place. 

Larry, you are in a very unique position. You are one of a handful of people on the planet who has the power to make real change, in the real world, to solve our most dire problems. I urge you to use this power for the good of all – not just talk about it.

To see the full mark-ed of the letter, click here.  

I have also included a short synopsis of the changes.

Paragraph 1: I added at the end:

…and take action on their behalf. The time for words has passed; the time for action is now. I intend to use the full power of my position and the weight of BlackRock’s standing to see that positive change is implemented.

Paragraph 2-18: No changes – you are a masterful at describing the problem.

Insert these paragraphs after 18:

To ensure that we address this crisis in a timely manner, and to reduce risk to our customers, beginning December 1, 2021, BlackRock’s actively managed funds will only invest in companies that: 1) Adopt a climate transition plan aligned with the Climate Action 100+ benchmarks; 2) Provide annual reporting of progress against the benchmark; and 3) Conduct an annual shareholder vote to provide feedback to management on progress. Collectively, these actions are also known as Say on Climate.

BlackRock will also exclude from our actively managed funds all companies involved in rainforest destruction – both those flagged here and those involved in production of wood pellets for energy production.

BlackRock will create variations of each of our indexes to underweight non-compliant Say on Climate companies and those involved in rainforest destruction. We will clearly state this in the prospectus and will name these indexes with their current name followed by “+Climate.” 

BlackRock will vote our proxies in support of all shareholder resolutions asking for: transparent disclosure of carbon emissions; setting net-zero targets; reporting on stranded assets; disclosing supply chain deforestation activities; and reducing single use plastics. 

BlackRock will disclose the minutes of all company engagement dialogues to enable all shareholders to benefit from these direct interactions.

Finally, at companies that do not provide full transparency on Scope 1, 2, and 3 emissions and do not meet the “Say on Climate” provisions noted above, BlackRock will commit to voting no confidence for each director up for election at each such company.

Paragraph 22 and 23: I shifted from focusing on TCFD to a more broadly accepted benchmark called the Climate Action 100+ (CA100+) Benchmark. I am sure you know it as you recently joined the CA100+ and were involved in its drafting.

Paragraph 27: Small change: the BRT New purpose names five stakeholders, yet you consistently list four, “shareholders, employees, customers, and the communities in which they operate.” I am not sure why you consistently leave out “supply chain” so I added it for you here and in paragraph 29.

Paragraph 29: I added this to the end:

Because of this, I ask all companies to adopt the stakeholder capitalism purpose as stated by the World Economic Forum and the Business RoundTable as an amendment to your bylaws. I commit that BlackRock will do the same by the end of 2021.

Paragraph 31: I added this to the end:

Specifically, this means going beyond the simple EEO-1 (Equal Employment Opportunity) disclosure to also provide shareholders with detailed information on recruitment, promotion, and retention rates by gender, race, and ethnicity.

I trust that these small edits will demonstrate the power that you have to bring rapid and meaningful change to the world. It is in your hands to solve the problems that you have identified. Larry, it is time to use your power and not just talk about it.

Sincerely,

Andrew Behar

Chief Executive Officer

As You Sow