BlackRock CEO Fink Warns Companies Need To Change Or Risk Losing Firm's Support

Fink issued the warning in a letter to large companies predominantly in the US, UK, France and Germany at the end of last week stating public expectation had never been greater, the FT reports.

He said the "time had come for a new model of shareholder and that "to prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society".

Update: BlackRock restructure to see number of manager displacements

He added: "Companies must benefit all their stakeholders, including shareholders, employees, customers and the communities in which they operate."

Fink urged companies to reassess and understand the impact they have on society as well as how societal changes - such as wage growth and climate change - may impact them.

He said BlackRock would pay close attention to the strategy, board make-up and purpose of companies in the years to come as part of its renewed focus on corporate governance.

Barbara Novick, vice-chair and a co-founder of the New York-listed asset manager, will oversee the company's efforts around investment stewardship, while the firm itself intends to double the size of its corporate governance team during the next three years.

The move comes after BlackRock was criticised for its record on corporate governance and the firm was accused of rarely taking management to task over contentious issues.

BlackRock under fire from shareholder adviser Glass Lewis over high executive pay

In the letter, Fink added shareholders were too focused on annual meetings and proxy votes, and companies on quarterly results.

He said: "If engagement is to be meaningful and productive — if we collectively are going to focus on benefiting shareholders instead of wasting time and money in proxy fights — then engagement needs to be a year-round conversation about improving long-term value.

"A company's ability to manage environmental, social, and governance matters demonstrates the leadership and good governance that is so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process."