“Dear Mr. Fink”: Black Rock and the fog of sustainability

I just published a short article on LinkedIn applauding Black Rock’s sustainability commitment while proposing a simple next step to cut through the fog of sustainability. That step would use their market power to ask the right questions. And then listen to and challenge the answers.

My suggestion was a simple 4-page ESG report. Just ask 4 questions about each Black Rock portfolio company or proposed investment — and allow only 1 page for each answer:

  1. Is this company’s business model truly sustainable?
  2. Are this company’s operations sustainable?
  3. Is this company improving its performance fast enough?
  4. Is this company leading, following – or part of the problem?

This approach comes from the painful, powerful training I got in my first job out of college. Two weeks out of Harvard, I went to Springfield Illinois to work in the Budget Bureau in the office of the Governor (when there was a governor who wasn’t in jail). My boss and first real mentor had a simple expectation for every document we took to the Governor:

  • Be brief. Keep it short, usually one page.
  • Be comprehensive. That one page usually included “a simple table that explains the universe.”
  • Be clear. The document had to include options that were so clear that the Governor just had to tick a box, everyone would know what to do, and no one could argue about his intentions.
  • Be fair and credible. Often our documents were critical, reviewing agency-head proposals and recommending approval or rejection. Many times our documents recommended denying requests or cutting budgets. EVERY document had to be written with a simple expectation: if the Governor reached across the desk and handed the document to the agency head/proponent, that person would read the document and, while they might not agree with our recommendation, they would agree that the write-up was fair, accurate and complete. And sometimes the Governor DID do just that with the document.

My boss personally tested every document against those expectations. My first assignment (reviewing a tiny State agency with two employees) went through seven drafts. My Harvard ego barely survived. Forty-five years later I can still remember much of that document – and all the lessons I learned.

Now think about the last corporate CSR/ESG report you wrote or read. Or even just the CEO letter at the front. Or your transmittal note that went with the report for approval. Does it pass the test?

[Opinions in this blog are solely those of Scott Nadler. They do not necessarily represent views of Nadler Strategy’s clients or partners, or those cited in the post. To share this blog, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.]

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