BlackRock’s 6-trillion-dollar opportunity for Canada: Lead with impact
The biggest companies in the world were just sent a monumental $6-trillion message by Larry Fink, the CEO of BlackRock, the investment firm responsible for a large portion of the world’s wealth. He wrote a letter this week informing them that if they do not contribute to society they will lose the firm’s support.
His message was simple: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
The New York Times called it “a watershed moment on Wall Street.” Trillions of investment dollars are now seeking more than simply maximum profit and short-term gains. A titan of capitalism told the world’s CEOs that they need to achieve strong financial and social returns to effectively manage risk and achieve positive performance.
What does it mean for Canada?
BlackRock’s message presents an unprecedented opportunity for Canada’s companies and capital markets. But it seems we missed the message in our national conversation last week, focusing instead on staples like marijuana, oil, bread and the Bitcoin rollercoaster.
Leading nations and institutions have got the point about purpose. Governments and financial institutions around the world are rapidly recognizing that they cannot continue with business as usual. Challenges ranging from rising inequality to climate change are having a negative impact on communities and on the bottom line of small and big business. Major investors and millions of customers are demanding that businesses balance social, economic and environmental mandates—and multinationals, like Danone, are responding. How companies manage everything from their energy sources to their wages can affect everything from revenues to market cap to brand equity.
Canadian companies will fall behind if they do not lead—or at least follow—the trend of truly integrating a triple bottom line into how they manage their money and businesses.
The opportunity is clear: trillions of dollars are seeking social, environmental and financial performance. BlackRock has $1.7 trillion in active funds for direct investments. We now know that a deciding factor of continued investment will require proof of material benefit to society. Further, BlackRock may be the biggest investor, but it is not the only investor seeking impact. Let’s not forget that roughly 200 of the top global impact investors manage nearly $114 billion in total assets. Over the past few weeks alone, major market players like ValueAct Capital and Jana Partners have announced their entrance into the impact investing market.
Canadian investors from Main Street to Bay Street should listen to this message. If you aren’t considering the impact of your investments, you aren’t thinking in line with one of the world’s largest investors. If you aren’t thinking about impact, you fall outside of the mainstream. And yes, businesses and investments concerned with creating impact perform equal to or stronger than traditional businesses and investments. By managing the total performance of your portfolio, you are protecting the long-term performance of your investments. More importantly, you are protecting people and the planet.
Canadian entrepreneurs and CEOs need to follow the money. Whether you run a startup or a Fortune 500 company it’s increasingly important to measure and manage your company’s impact in order to attract and maintain investment capital and customers. If Canada wants to be the home of the world’s best companies—and raise the best business gazelles, unicorns and, better yet, zebras—it needs a supportive ecosystem that can help those companies to achieve total economic, social and environmental performance.
Canada’s business and financial leaders need to stand up and lead. BlackRock’s CEO wrote a letter; you can also speak out. Better yet, you can take action: you can move your investments and your enterprises toward impact.
- Take the B Impact Assessment to measure and manage your company’s impact, and follow over 2,400 other leading businesses, including Patagonia, Hootsuite and BDC, to become a Certified B Corporation. We need more Canadian companies that are impact leaders and are clear about where they stand.
- If you work in capital markets, direct your asset manager, financial institution, marketplace or funds toward impact.
- Leverage impact investment platforms like SVX or public market options to make investments into ventures and funds that have strong financial, social and environmental performance.
Canada has an opportunity to be a world leader with businesses and capital markets dedicated to impact. Everyone is talking about having an impact—let’s do something about it.
Adam is the Director, SVX at MaRS. Adam helped found the MaRS Centre for Impact Investing and the School for Social Entrepreneurs – Ontario. Prior to MaRS, he was Executive Director of the Ontario Association of Food Banks (OAFB). See more…
Joyce is the director of B Lab Canada at the MaRS Centre for Impact Investing. See more…