The environmental efforts of companies are often seen as little more than greenwash, but the announcement by BlackRock that its future investment decisions will be focused on environmental sustainability potentially opens up opportunities for brands and marketers to take genuine action.
In his annual letter to chief executives, Laurence D. Fink, BlackRock chairman and chief executive, signalled a change of direction for the asset management giant.
“Climate change is almost invariably the top issue that clients around the world raise with BlackRock,” he reported.
“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” he wrote. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”
For BlackRock, that means an early exit from investments that “present a high sustainability-related risk” and the launch of new funds that avoid fossil fuels.
Fink also indicated a greater level of activism, with BlackRock prepared to vote against boards it regards as not making sufficient progress on issues around sustainability.
With $7 trillion of assets under its management, it has some clout (although the prevalence of tracking funds may play against that notion) and its move will push environmental issues up the business agenda, for both other investment firms and companies invested in.
The New York Times noted that one outcome may be that CEOs will have greater licence to shift strategy and focus on sustainability even if that leads to a short-term cut in profits.
That should in turn lead to a greater focus on building brands for the long term in a business environment that isn’t so narrowly focused on quarterly figures.
Fink has in the past raised the need for companies to embody a clear social purpose and to consider the needs of stakeholders beyond shareholders.
A survey for WARC’s Marketer’s Toolkit 2020 found that 77% of marketers agree that brands need to take a stand on social issues, while 84% of respondents said conscious consumerism and sustainability would have significant or some impact on marketing strategy in the year ahead.
But taking a stand should not be momentary, regional, or situational, the Toolkit cautions: brands that take a stand must accept the totality of their commitments. It may be that BlackRock’s new stance will allow them more freedom to do just that and to demonstrate it in their marketing.
Sourced from BlackRock, New York Times; additional content by WARC staff