“Follow the money” is a catchphrase that was popularized by the 1976 movie, “All the President’s Men.” While following the money was a way for Robert Redford and Dustin Hoffman’s characters to sniff out political corruption, the words might also be instructive for helping predict the future.
Regardless of the will of the American people, change is often slow to occur in business or politics if there isn’t financial incentive. And while sustainability is a buzzword that both companies and government representatives have given lip service to for years, real change to the status quo hasn’t come easy or expeditiously.
According to Laurence Fink, chairman and CEO of BlackRock, the New York City-based global investment management goliath, that could soon change.
In two recent letters, Fink makes the case that sustainability is the criteria for which companies will be judged on in the coming years.
In his letter to clients titled, “Sustainability as BlackRock’s New Standard for Investing,” Fink writes:
“Over the past few years, more and more of our clients have focused on the impact of sustainability on their portfolios. This shift has been driven by an increased understanding of how sustainability-related factors can affect economic growth, asset values and financial markets as a whole. … Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products and engages with companies. We believe that sustainability should be our new standard for investing.”
In his letter to CEOs titled, “A Fundamental Reshaping of Finance,” he continues:
“Over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing skepticism from the markets, and in turn, a higher cost of capital. Companies and countries that champion transparency and demonstrate their responsiveness to stakeholders, by contrast, will attract investment more effectively, including higher-quality, more patient capital.”
In essence, Fink is saying that institutions that refuse to take a proactive approach to going green will soon be left behind.
For the construction, demolition and C&D recycling industries, this transformational shift could directly result in more LEED project work, greater landfill diversion mandates and more demand for recycled materials.
You don’t become the world’s largest asset manager (BlackRock boasts over $7 trillion in the bank and counting) by misjudging trends. The future of more conscientious business practices is on the horizon, and with it, a whole new world of opportunity for C&D professionals who are ready to take advantage.