New model of shareholder engagement
With companies facing an increased demand from society to serve a social purpose, there is a growing need to embrace a new model of shareholder engagement which should look beyond annual meetings and proxy votes and aim to initiate discussions about long-term value creation for investors, according to BlackRock’s chief executive Larry Fink.
In its annual letter to global business leaders Fink noted that with many governments failing to prepare for the future, including issues such as retirement, the society tended to look at private sector.
Therefore, the companies wanting to prosper would be expected not only to deliver financial performance but also to make contributions to society, he stressed.
Following this, companies should be able to articulate their long-term growth strategies which should be evolving along their respective business environment in order to “explicitly recognise possible areas of investor dissatisfaction.”
Additionally, the companies should be able to demonstrate to their investors that their boards were engaged with the strategic direction of the company.
BlackRock also warned that it could choose to sell the securities of a company if it had doubts about the company’s strategic direction or long-term growth.
“The time has come for a new model of shareholder engagement – one that strengthens and deepens communication between shareholders and the companies that they own,” Fink wrote.
“If engagement is to be meaningful and productive – if we collectively are going to focus on benefitting shareholders instead of wasting time and money in proxy fights – then engagement needs to be a year-round conversation about improving long-term value.”
AUTHOR
Oksana Patron
Recommended for you
The alternative investment manager has signalled its intentions to repackage an existing fund into a second private equity vehicle, targeting both listed and unlisted opportunities.
The acquisition of Mason Stevens by Adamantem Capital has reached completion, as the wealth platform looks to increase investment into its services for Australian wealth practices.
Platinum Asset Management and VanEck have both announced name changes to multiple of their ETFs to clarify their complexity.
Active ETFs are gaining traction in Asia-Pacific as wealth managers seek to blend the low-cost fees of passive with active management.
