"Tectonic shift" to sustainability will continue, says Larry Fink's CEO letter.

BlackRock CEO Larry Fink issued his annual letter to CEOs today, emphasizing that, despite the adverse impacts of COVID-19, climate change and social and political upheaval, assets continue to flow into sustainable investments. (Indeed, perhaps it is because of the global challenges of this year that more and more investors are interested in supporting long-term growth that seeks to combine profits with fighting climate change, racial inequality and other sustainability objectives).

For example, from January through November 2020, "investors in mutual funds and ETFs invested $288 billion globally in sustainable assets, a 96% increase over the whole of 2019."  With investors clamoring for sustainability-focused companies, the "tectonic shift" will accelerate, underscoring how important it is for management teams and boards to be aware of and on top of how these issues affect their organizations and relevant stakeholders (not just shareholders). The good news seems to be that organizations focused on sustainability enjoy a "sustainability premium" in their performance.

Mr. Fink's letter describes his firm's commitment to a net zero transition (one that emits no more carbon dioxide than it removes from the atmosphere by 2050), and encourages other companies to disclose how they plan to do so.  His letter also strongly encourages a move to a single, global standard for sustainability disclosures, rather than waiting for regulators to impose them (a move broadly expected from the SEC under President Biden).

Mr. Fink's letter from a year ago drew widespread attention and seemingly spurred market participants into action--my bet is that this letter has a similar result as it relates to transparency as we wrestle our way out of COVID and other challenges still hanging on from 2020.