The Making of Long-Term Capitalism
Published in BlackRock, 2022
Recommended citation: Lawson, S., Boskovic, T., Hawley, A., Cooke, T., Garvey, G., Kazdin, J., Ba, M., Li, M., Ang, A., Shores, S., Goldman D., Schwaiger, K., Huang, J., Miller, B., McKinley, J. The Making of Long Term Capitalism (2022). BlackRock White Paper. https://www.blackrock.com/corporate/literature/whitepaper/the-making-of-long-term-capitalism.pdf
As an asset manager we are a fiduciary for our clients, who are the owners of the assets we manage. This role obligates us to act in the best economic interests of our clients. Because more than half of the assets we manage are in retirement savings, we are particularly focused on creating and maintaining value over the long term.
To this end, we are launching a research initiative designed to better understand the ways that a company can create long-term value for its shareholders. We undertake this from an economic and financial standpoint.
One key component of long-term value creation is the relationships between companies and their key constituents, often defined as employees, clients, suppliers and communities. We see these relationships as a series of investments. Just as companies invest in intellectual property or in plant and equipment, they can also invest in stronger relationships with these key stakeholders – with the goal of generating productive and innovative employees, loyal clients, robust supply chains and supportive business environments. We think these investments are critical for creating value for shareholders over the long term.
Conversely, we also think there is a cost associated with not making these investments. When companies fail to invest, or when their interactions with key constituents are negative, they can harm their own long-term prospects and impede value creation, as potential talent stays away, clients turn elsewhere and community or regulatory opposition limits growth.
Our intent is to conduct data-driven research to better understand the linkages between these investments and the creation and maintenance of shareholder value over the long term. As part of this we hope to broaden the public discussion around long-term capitalism and to create a forum for engagement and dialogue among asset owners, asset managers, companies, employees, community groups, policymakers and regulators, non-profit organizations, media & academics.
Recommended citation: Lawson, S., Boskovic, T., Hawley, A., Cooke, T., Garvey, G., Kazdin, J., Ba, M., Li, M., Ang, A., Shores, S., Goldman D., Schwaiger, K., Huang, J., Miller, B., McKinley, J. The Making of Long Term Capitalism (2022). BlackRock White Paper.