When you hear the word “Blackrock”, images of advocating for the common good aren’t the first ones that comes to mind. Recent events, though, have led us to believe that perhaps Wall Street is warming up to the sustainability movement. Actions taken by Blackrock and a host of Fortune 500 companies are proving that American capitalism doesn’t have to be self-serving – as these companies show, making a profit and making a difference don’t have to be mutually exclusive.
As head of the world’s largest asset manager with nearly $2 trillion under management, Blackrock’s Larry Fink is a powerful person with the ability to influence what companies all over the world are doing. As a substantial institutional holder of many of the world’s largest companies, Blackrock has the ability to remove companies from its portfolios if it they feel it is not in their shareholders’ best interests. Blackrock also has the ability to vote by proxy on behalf of its clients, if the client elects so.
In his 2017 letter, Larry Fink expressed what seems like a pretty strong vote in favor of sustainability as a driver of long term value creation:
Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals?
As we enter 2018, BlackRock is eager to participate in discussions about long-term value creation and work to build a better framework for serving all your stakeholders. Today, our clients – who are your company’s owners – are asking you to demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens. We look forward to engaging with you on these issues. (Blackrock, n.d.)
While this passage reflects a pretty serious intention to support impact investing, but talk is just talk. Interesting, Fink’s actions since then have shown this treatise isn’t just lip service.
In the aftermath of the traffic Parkland shooting, Fink shocked the world with his response, taking a stand on gun control by reexamining holdings in gun makers and retailers. Blackrock said they would provide investors the ability to invest in gun-free funds and more actively engage in discussion with gun manufacturers. (CNN, 2018).
What impresses us is the urgency and speed with which Blackrock took action. This serves as an outstanding example of how impact investing can be transformative and be applied to influence societal outcomes that improve society.
Other Sustainable Businesses We Like
Blackrock isn’t the only one making a difference.
It is a common misperception that only non-profits charities, and philanthropic institutions have the public interest in mind. We see these businesses making an impact and a profit at the same time, giving so much to the world, giving not just by monetary donation but also by making the purpose of their business to solve social problems.
Tesla, with its electric cars, is making its impact on the world by challenging the status quo and elevating the level of technical sophistication in the automobile industry. In doing so, it has helped reduce fossil fuel emissions. Tesla’s ultra-safe design has maybe even saved a life or two.
When I saw Revenge of the Electric Car, I realized the impact that electric vehicles could have and saw how Elon Musk, whom I really admire, risked everything he owns to make Tesla succeed. I see Elon Musk as a model of congruence. He doesn’t have to defy his values in order to make a profit. In fact, by making his passion for doing good come alive, he’s only make his business more successful.
Nike is taking a green approach to its manufacturing, both in how they conduct their own operations and who they choose to work with as partners. Every supplier in their chain has to follow Nike’s Code of Conduct, and their sustainability score is factored into their performance review (Nike, n.d.)
The next time I need a pair of shoes, I’m buying Air Jordans.
Dell’s headquarters is completely powered by renewable energy (Angelova, 2009). As the first LEED-platinum certified building on Long Island, we love this idea.
Not only does a sustainable workplace promote higher health for the company’s workers, it can also have a great impact on the surrounding community. Green buildings reduce the carbon footprint as well as noise and air pollution.
Click below for a live example.
For the last several years, Apple has been named one of the world’s most environmentally-friendly companies in the tech sector (Fingas, 2017). It earned this accolade for its conservative use of coal, nuclear, and natural gas as energy sources, among other things.
We love how they are pushing for increased access to renewables. It’s a great thing when a leading company uses its clout to do something sustainable. This sets an example for the rest of the industry.
Originating change from the top makes the potential for impact even stronger.
Tom’s of Maine
Tom’s was one of the pioneers of the sustainable personal products industry. Its natural oral care, antiperspirants, baby products, and body and lip products offer the public ways to care for themselves and their families without exposure to harsh chemicals.
Having been in existence for over four decades years, Tom’s was an early adopter of sustainability when the movement began and who knows who they’ve inspired?
Investing and Personal Values Not Mutually Exclusive Anymore
It is commonly believed that nice people finish last. Unfortunately this idea has demolished the reputation of the financial sector. The industry has evolved to the dawn of a new day and the time has arrived for a new mantra.
For example, at our firm, advisors believe that the way to business growth is conducting the practice in congruence with the values that govern our lives. And it’s working.
Our five core values are represented by GRITT:
The result has been a culture unseen before in the financial services industry, one that results in outcomes that maximize the benefit for all parties in the long term, from investors to society and the world at large.
Our people make decisions very differently from other broker dealer firms in the industry because we see the purpose of our business as to do good. When making decisions, the first question is always, “Does this maintain our values?”
What is your company doing to make the world a better place and counterbalance the problems that plague our society? Comment below.
Angelova, Kamelia. (23 Sept, 2009). The 15 Best Companies For The Planet. Business Insider. Retrieved from http://www.businessinsider.com/the-15-best-companies-for-the-environment-2009-9#2-dell-14
Fingas, Roger. (10 January, 2017). Apple again named Greenpeace's most environmentally-friendly company. Retrieved from http://appleinsider.com/articles/17/01/10/apple-again-named-greenpeaces-most-environmentally-friendly-company
Fink, Larry. (n.d.) Larry Fink’s Annual Letter to CEOs: A Sense of Purpose. Retrieved from https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter
Isidore, Chris. (2 March, 2018). BlackRock turns up the pressure on gun makers. CNN Money. Retrieved from http://money.cnn.com/2018/03/02/investing/blackrock-gunmakers/index.html.
Nike. (n.d.). Nike Aims to Transform Manufacturing. Retrieved on February 15, 2018 from https://about.nike.com/pages/transform-manufacturing