BofA, BlackRock and State Street CEOs talk stakeholder primacy — and fall short

December 14, 2020 by  
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BofA, BlackRock and State Street CEOs talk stakeholder primacy — and fall short Sara Murphy Mon, 12/14/2020 – 01:45 Some of the world’s biggest asset managers have been talking a lot lately about sustainable capital markets, stakeholder capitalism and how improved environmental, social and governance (ESG) disclosure can contribute to more resilient markets. While these organizations are taking steps in the right direction, their companies’ actual behavior in the marketplace often falls short of their leaders’ proclamations, and those leaders’ visions for capital markets fail to rise to the increasingly urgent challenges that confront our society. At the recent 2020 Sustainability Accounting Standards Board (SASB) Symposium , the CEOs of Bank of America (BofA), BlackRock and State Street provided their views on the role of the private sector in addressing societal challenges and why ESG integration is no longer optional. They led with their thoughts on stakeholder capitalism, a concept that has exploded since Aug. 19, 2019, when the Business Roundtable (BRT) updated its Principles of Corporate Governance to redefine “the purpose of a corporation to promote an economy that serves all Americans.” CEOs from 181 publicly traded companies — including those addressing the SASB Symposium — signed the principles, which purportedly signaled an end to Milton Friedman’s doctrine of shareholder primacy established in the 1970s, and the beginning of a new era of stakeholder capitalism. “The concept of just one stakeholder — shareholders — has evolved and changed,” said Larry Fink, CEO of BlackRock, the world’s largest asset manager. He noted the need for businesses to work with their employees and clients, and in a globalizing world, to work with the societies in which businesses operate. We’re not looking for short-term blips as a shareholder but rather durability. “This creates some difficulties but companies that manage this set themselves up for long-term profitability,” Fink said. “We’re not looking for short-term blips as a shareholder but rather durability. In challenging cycles like the pandemic, those companies are the ones that make it through and endure. That’s how management and boards need to think about this.” Bank of America CEO Brian Moynihan concurred, adding that a long-term focus on all constituencies helps to attract talent and customers. State Street Global Advisors CEO Cyrus Taporevala remarked that asset managers and owners are reacting to three trends: a growing correlation between ESG factors and investment risk; end investors wanting to see their ESG preferences expressed in their investments; and regulators around the world signaling an intention to require more around ESG criteria, reporting and investing. A clarion call to convergence All three CEOs repeatedly asserted an urgent imperative for the financial services industry to “coalesce” and “converge” around standardized disclosure of ESG information and data, perhaps unsurprising given that SASB — the symposium’s host — is a leading disclosure framework. Their general argument was that standardized disclosure is less burdensome for companies, which will enhance the quality of reporting and encourage smaller companies to participate. It allows for collection and analysis of large data sets that help investors, regulators and the public to assess and compare companies’ ESG performance, they said. In addition to SASB, the CEOs pointed to the Task Force on Climate-related Financial Disclosures (TCFD) as a leading standard. Moynihan recommended convergence with the United Nations Sustainable Development Goals (SDGs). “If that’s what the world told us we need to do across 90 countries in 2015, then that’s what we should be aiming to achieve,” he said. The CEOs also emphasized the value of transparency. “We need people to say what they’re doing so they can be encouraged to do more,” Moynihan said. “When we [at Bank of America] make decisions about whom to lend to, we have the information, but the world may not. It’s a little behind the curtain. Standardized disclosure will cascade down the system, even to a middle-market private company where employees and customers will ask, ‘Where’s our disclosure?’” “Transparency reveals the good and the bad,” Fink said. “Better financial and sustainability disclosure forces management and the board to have laser focus. It lifts us faster, even if we’re embarrassed at times when we’re not moving as quickly as we should.” Too little too slowly And indeed, they’re not moving as quickly as they should, and the actions of these three companies are not entirely setting the examples these CEOs espouse. Bank of America is the world’s fourth leading financer of fossil fuels , even as the imperative to decarbonize the economy to stave off the worst effects of climate change grows more urgent by the day. In 2019 the company agreed to pay $4.2 million to resolve employment discrimination allegations brought by the Office of Federal Contract Compliance Programs. Nevertheless, Bank of America maintains it is fulfilling its commitment to stakeholder primacy. Standardized disclosure will cascade down the system, even to a middle-market private company where employees and customers will ask, ‘Where’s our disclosure?’ Among 60 of the world’s largest asset managers, BlackRock was the fourth least supportive and State Street the 13th least supportive of shareholders’ efforts to promote better social and environmental stewardship among companies in their portfolios, according to a recent analysis by campaigning organization Share Action. Both companies’ own reporting and disclosure on their social and environmental stewardship lacks the sort of transparency and meaningful information they purport to champion in the marketplace. This may be because a pernicious tension is built into the entire stakeholder capitalism construct. A question of purpose and prosperity “We’re not trying to disrupt a company or destroy their footprint or business,” Fink said. “I know some people would like for us to do that, but that is not our fiduciary responsibility. Our fiduciary responsibility is to maximize profit.” “State Street Global Advisors is looking to get the best risk-adjusted return for investors, and we come at ESG from a perspective of value, not values,” Taporevala said. “It’s not up to us as a fiduciary to decide what the right values are.” Therein lies the conundrum: What’s best for the social and environmental systems on which our economy depends won’t always align with an individual company’s profit maximization. Companies, investors and shareholders will have to reckon with this reality. Rick Alexander, founder and CEO of The Shareholder Commons, expounded on this point in a February article : Most investors hold broadly diversified portfolios and rely on their job as their primary financial asset. They need a healthy economy and planet in order to have solid portfolio returns, decent wages and good lives. They know that some companies need to surrender shareholder value in order to preserve the critical systems we all rely on (think coal, oil, tobacco and, not coincidentally, large financial institutions that threaten systemic stability). A recent study determined that publicly traded companies create annual social and environmental costs of $2.2 trillion. While any given company may profit by ignoring costs that it can externalize, its diversified shareholders ultimately pay the price. Moynihan emphasized that the world’s problems cannot be solved without leadership from the private sector. He pointed to the SDGs, noting that all the charitable spending in the world doesn’t amount to the estimated cost of delivering on those goals. “You could go to governments, but they’re running huge deficits, and they don’t have the money,” Moynihan said. The three CEOs talked at length about the importance of coalescing around a common set of metrics and data, but that’s only a partial solution. If the objective is truly to assure our ongoing prosperity, then everyone involved in capital markets must prioritize the vital systems upon which a thriving economy depends, rather than profit margins at any one company. At the end of the day, only that approach will serve both shareholders and stakeholders. Pull Quote We’re not looking for short-term blips as a shareholder but rather durability. Standardized disclosure will cascade down the system, even to a middle-market private company where employees and customers will ask, ‘Where’s our disclosure?’ Topics Finance & Investing Reporting TCFD GreenFin Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off “The Fearless Girl” statue facing Charging Bull in Lower Manhattan, New York City (June 2017) Shutterstock Quietbits Close Authorship

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BofA, BlackRock and State Street CEOs talk stakeholder primacy — and fall short

One World Trade Center is Set to Open in 2014

January 2, 2014 by  
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We’ve got a lot to look forward to in the new year, including the opening of the long-awaited One World Trade Center . The tower’s construction has faced many obstacles over the past few years, but developers say it will finally be set to open some time in 2014. READ MORE > Permalink | Add to del.icio.us | digg Post tags: 1 World Trade Center , 1 world trade center opening , 1 wtc , eco design , green design , lower Manhattan , one world trade center , Skidmore Owings and Merrill , sustainable design , Tallest Building in the United States , WTC        

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One World Trade Center is Set to Open in 2014

See the First Section of the World Trade Center Transportation Hub to Open to the Public (PHOTOS)

November 1, 2013 by  
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The first section of the nearly $4 billion World Trade Center Transportation Hub is now open to the public. Designed by world-renowned architect Santiago Calatrava, the World Trade Center West Concourse is a study in white, and gives New Yorkers the chance to experience Calatrava’s famous articulated ribs on a daily basis. The new 600-foot-long passageway replaces a temporary pedestrian bridge over West Street and allows commuters to get from the WTC PATH Station to offices on the far West Side without having to walk up to street level. READ MORE > Permalink | Add to del.icio.us | digg Post tags: Brookfield Place Pavilion , lower Manhattan , mixed use buildings , oculus , path , santiago calatrava , world trade center , world trade center pathway , world trade center transportation hub , WTC , WTC PATH Station , WTC West Concourse , WTC Western Concourse        

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See the First Section of the World Trade Center Transportation Hub to Open to the Public (PHOTOS)

SunGlacier: A Solar-Powered Leaf That Makes Ice in the Desert

November 1, 2013 by  
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Read the rest of SunGlacier: A Solar-Powered Leaf That Makes Ice in the Desert Permalink | Add to del.icio.us | digg Post tags: Ap Verheggen , Art , condensation , desert , eco design , environmental art , green design , ice , Sahara , Sahara desert , shipping container , SunGlacier , sustainable design , the netherlands , UNESCO , UNESCO-IHE , water issues        

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SunGlacier: A Solar-Powered Leaf That Makes Ice in the Desert

DIY: Add a Pop of Color to Your Winter Wardrobe – Learn How to Needle-Felt Shapes to Woolen Clothes

November 1, 2013 by  
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Woolen sweaters, dresses, pants, skirts, and any accessory you can think of can be spruced up with the addition of some needle-felted appliqués. The elbows on cardigans are popular to decorate, as are pockets, hems, and necklines, and with the variety of roving colors that are available, you can go absolutely wild with any hue your heart desires.  This DIY project does require some time and some special equipment, but it’s a great project for a chilly weekend spent indoors.  Read the rest of DIY: Add a Pop of Color to Your Winter Wardrobe – Learn How to Needle-Felt Shapes to Woolen Clothes Permalink | Add to del.icio.us | digg Post tags: DIY , diy felt appliques , felting , how to felt , how-to , needle felting , winter , wool , woolen clothes , woollen clothes        

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DIY: Add a Pop of Color to Your Winter Wardrobe – Learn How to Needle-Felt Shapes to Woolen Clothes

Maxwan Architects’ House G is a Sun-Filled Retrofitted Barn Retreat in the Netherlands

November 1, 2013 by  
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Read the rest of Maxwan Architects’ House G is a Sun-Filled Retrofitted Barn Retreat in the Netherlands Permalink | Add to del.icio.us | digg Post tags: daylighitng , House g , Maxwan Architect , natural lighting , Netherlands green building , Netherlands remodel        

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Maxwan Architects’ House G is a Sun-Filled Retrofitted Barn Retreat in the Netherlands

President Obama Issues Executive Order to Prepare the United States for Climate Change

November 1, 2013 by  
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In a decisive action some feared would never come, President Obama today signed an executive order that will begin to prepare the United States for the impacts of climate change . The order comes just one year after Hurricane Sandy devastated the eastern coast, bringing death and devastation to waterfront communities, including the country’s most populated metropolis, New York City . That storm, and the drought, wildfires, floods and other extreme weather that has occurred since, were a wake up call for much of the nation. Today, President Obama’s executive order acknowledges that climate change is real, it’s happening now, and if we are to survive, we must begin to prepare our cities to withstand an uncertain future. Unfortunately, the order seems resigned to dealing with the symptoms of climate change rather than stopping a major cause: i.e. fossil fuel extraction and consumption. Read the rest of President Obama Issues Executive Order to Prepare the United States for Climate Change Permalink | Add to del.icio.us | digg Post tags: Climate Change , climate change preparedness , Drought , executive order , extreme weather , floods , global warming , government , infrastructure , obama , president , renewable energy        

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President Obama Issues Executive Order to Prepare the United States for Climate Change

How ‘Soft Infrastructure,’ Like Wetlands and Green Roofs, Could Help Protect NYC from Future Storms

August 26, 2013 by  
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As the climate changes and sea levels rise, cities that were previously thought to be relatively safe are looking more and more vulnerable — just ask anyone in New York who lived through Hurricane Sandy. Last year, a group of architecture firms united to tackle these issues with innovative green design. Instead of calling for the installation of giant Rotterdam-style floodgates , the designers called for more ” soft infrastructure ,” which involves using natural resources like coastal marshlands and building more sustainable infrastructure like green roofs. READ MORE >   Permalink | Add to del.icio.us | digg Post tags: ARO , artificial wetlands , dlandstudio , hurricane irene , Hurricane Sandy , lower Manhattan , ltl architects , Matthew Baird Architects , nArchitects , resilience , resiliency , resilient design , rising currents , SCAPE , soft infrastructure , wetlands , YC        

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How ‘Soft Infrastructure,’ Like Wetlands and Green Roofs, Could Help Protect NYC from Future Storms

RFP for NYC’s Flood-Protecting Seaport City Puts It a Step Closer to Reality

August 26, 2013 by  
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If you thought New York City was just playing around when it proposed building a mini city onto the side of Manhattan to protect it from future storms , check this out. Yesterday, Mayor Bloomberg issued a request for proposals for the Seaport City project to study its feasibility. Click here to learn how and when to submit to the request. READ MORE > Permalink | Add to del.icio.us | digg Post tags: Climate Change , eco design , green design , hurricane sandy nyc , mayor Bloomberg climate change , mayor bloomberg seaport city , new york resiliency plan , nyc climate change report , nyc flood map , NYC flood zones , NYC flooding , nyc future climate change , nyc future hurricanes , nyc future storms , nyc resiliency plan , nyc sea levels , NYC Storms , resilience , resiliency , resilient design , safeguarding manhattan , seaport city , seaport city nyc , storm surge protection Manhattan. Superstorm Sandy , stronger more resilient new york , sustainable design        

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RFP for NYC’s Flood-Protecting Seaport City Puts It a Step Closer to Reality

PHOTOS: Anne Militello’s Light Cycles LED Art Installation Unveiled at the World Financial Center

January 23, 2013 by  
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This year, winter in NYC will be all the more beautiful with this stunning new light installation by artist  Anne Militello  located in  Brookfield Place World Financial Center . Opened just last night, Light Cycles transforms a ten story glass pavilion into a dazzling light sculpture that can be seen sparkling from as far away as New Jersey. We checked out the opening of the installation yesterday — hit the jump to see our exclusive photos! READ MORE > Permalink | Add to del.icio.us | digg Post tags: Anne Militello , battery park , Brookfield Place World Financial Center , eco design , green design , LED art , LED light installation , light art , light art installation , Light Cycles , lower Manhattan , new york city , sustainable design , winter garden , world trade center

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PHOTOS: Anne Militello’s Light Cycles LED Art Installation Unveiled at the World Financial Center

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