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World's largest asset manager pushes CEOs to lead dialogue on societal issues

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World's largest asset manager pushes CEOs to lead dialogue on societal issues

BlackRock Inc. Chairman and CEO Larry Fink is calling on corporations to step up and fill a leadership vacuum in society as "trust in multilateralism and official institutions is crumbling."

In his 2019 annual letter, Fink, who sits at the head of the world's largest asset manager, doubled down on his prior-year address, which urged corporations to think beyond the bottom line. But this time around, the chief executive pressed CEOs to begin addressing broader societal concerns, ranging from the environment and retirement to gender and racial inequality at a time when "the global landscape is increasingly fragile."

"The world needs your leadership," Fink wrote in the letter, which was sent to the CEOs of companies BlackRock is invested in. "As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions and communities where they operate, particularly on issues central to the world's future prosperity."

BlackRock has become a leading force in the environmental, social and governance investing movement sweeping Wall Street.

With $5.976 trillion under its management, BlackRock brings significant clout to the conversations it holds with management teams. In 2018 the asset manager engaged with companies on issues including gun safety and gender and pay inequality.

In 2019, Fink wrote that BlackRock will be focused on engaging with companies over their governance structures, corporate strategies, capital allocation, compensation that promotes long-termism, the environment and human capital management.

BlackRock's ESG push has faced some backlash, however, including from legendary investors who have questioned the increasingly blurry lines between business and politics. In May 2018, Berkshire Hathaway Inc. Chairman, President and CEO Warren Buffett said he does not believe his personal political views should guide his company's investment strategy.

Yet Fink believes that a company's purpose and profits are "inextricably linked," especially given the growing role that younger generations play in the investment community. Newer investors, such as millennials, have become increasingly vocal about their expectations of the companies they invest in and work for, Fink said.

"Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term," Fink wrote. "Companies that ignore them stumble and fall."

Click here to read more S&P Global Market Intelligence news coverage of ESG.