Where does the money come from?
One could say that money runs the world, it’s quite true and more specific groups of people who hold that money. Many big investors can influence companies if they get a big enough share of it or even shake the market if they decide to rapidly pull back on their investments. As entrepreneurs in small businesses, it might feel irrelevant to pay attention to these big shifts in the trends, but I would argue that we can learn a lot from them as well as they influence our potential customers. We might not have enough power to make a big impact, but by keeping an eye on the global trends we can predict the future to a certain degree. That helps us to set direction and be ready for the change.
Larry Fink the CEO and Chairman of BlackRock, the world’s biggest private equity firm highlighted the importance of sustainability in the annual letter to the CEOs of 2021. Within the past 10 years, each year came up topics related to strong governance in corporations as well as the importance of long-term contracts, the crucial role of external stakeholders, and purposeful businesses. The climate crisis has been on the radar too. According to Larry Fink companies that won’t put serious effort to work towards net zero will lose competitiveness and will stay behind as they won’t be able to meet the needs of the market. Along the environmental issues come equally important social issues. Racial injustice, polarization, and lack of compromise between opposite parties are big problems. We are part of the solution, the choices we make and the companies we support or work with can have a great impact. The leadership in institutions will play a great role. Companies without diverse talent won’t be able to provide and create the solutions for customer’s needs and as Fink puts it, they simply won’t be able to outperform the competitors. A clear strategy on how to bring more diversity, equity, and inclusion is required. In other words, BlackRock won’t be likely to invest in companies that don’t fulfil that criteria.
It’s interesting to see how the biggest investing company’s vision does align in so many points with the UN’s sustainable development goals. Many of these feel so irrelevant for an average person living in Finland, but it’s good to keep in mind that the situation is not the same everywhere else.
Therefore, it’s worth looking up to what the big fish are up to and learn from them. As small fish, if we like it or not, we partly must go with the flow. We can get ready by looking at the bigger picture instead of being taken by surprise.
‘THE 17 GOALS | Sustainable Development’. Accessed 23 April 2021. https://sdgs.un.org/goals.
BlackRock. ‘Larry Fink CEO Letter’. Accessed 23 April 2021. https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter.