BlackRock: Linking Purpose to Profit

By: George Serafeim and Rohit Deshpande and Aiyesha Dey

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Synopsis: The case revolves around the actions that Barbara Novick, co-founder and Vice-Chair of Blackrock and Michelle Edkins, Global Head of Investment Stewardship would need to take on the back of the controversial CEO letters from Laurence (Larry) Fink, Chairman and CEO of BlackRock. Fink's letters focused on the importance of corporate purpose and investing considering environmental, social and governance (ESG) issues. The case also discusses Blackrock's plans for a new model of shareholder engagement to help drive the changes proposed in the letters. The case presents the opportunity to discuss the governance role played by major institutional investors, and how the responsibilities and actions of one large investor, BlackRock, should evolve in such a role going forward. It is not clear whether BlackRock should play such a role, and if so, whether they have the ability to enforce corporate compliance and to carry out this role given they are primarily an index investor. The case is likely to generate spirited debate about the merits of BlackRock's pronouncements, the importance of corporate investments in ESG themes, and allows for discussions on measurement and disclosure strategies that can judge progress on these dimensions.