Giving Compass’ Take:
• BlackRock and other investment firms have announced more oversight into the companies they’ve invested in, examining not just rate of returns or financial viability, but the social relevance of operations.
• This seems to be another big step for Corporate Responsibility, and impact investors should pay attention to how these firms execute this pledge. Will funds be pulled from companies that fail to show adequate social capital?
It’s contagious, spreading fast, and is having serious consequences throughout society.
I’m not talking about this season’s virulent flu, but the recent announcements by the biggest global mainstream investors that they will be increasing oversight on governance among their portfolio companies.
Investment firms — including BlackRock, Vanguard, and State Street (which collectively manage $14 trillion in assets) — and several other investment entities are putting the thousands of companies in their portfolios on notice that their governance practices and strategies will be more closely monitored by the funds in the future. And they’re not looking just for traditional governance — that the social relevance of their operations and missions will be evaluated, too.
This notice was included in an open letter by BlackRock founder and chief executive Larry Fink to the CEOs of the world’s largest public companies this past January. “Society is demanding that companies, both public and private, serve a social purpose,” Fink wrote.
To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.
Fink explains that he sees “many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining… As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges.”
Impact Investing is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.
Another open letter to CEOs by Bill McNabb of Vanguard and nine other investment firms including State Street and CalSTRS — calls on companies to reset their strategies to focus on long-term growth plans that include their interactions with society.
The signees, operating as The CEO Force For Good / Strategic Investor Initiative of CECP, have produced a seven-point checklist for expanded, CEO-driven reporting that includes such items as:
• What are the key risk factors and mega trends (such as climate change) your business faces?
• How to you describe your corporate purpose?
• How do you manage your human capital requirements over the long-term?
• How will the composition of your board (today and in the future) help guide the company to its long-term strategic goals?
Read the full article about investment giants stepping up governance oversight by John Howell at TriplePundit.
Looking for a way to get involved?
If you are interested in Boards and Governance, please see these relevant events, training, conferences or volunteering opportunities the Giving Compass team recommends.
Are you ready to give?
If you are interested in Boards and Governance, please see these relevant Issue Funds, Charitable Organizations or Projects where you can get involved.