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Group Case Study: Financial Management MBA

“BlackRock: Linking Purpose to Profit”

Group Case Study Report

Financial Management MBA

Student Names

1. Gurpreet Kaur

2. Navjot Kaur

3. Jasmine Kaur

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Introduction and Significance

A big change in how businesses are run is shown in the case study "BlackRock: Linking
Purpose to Profit." This change puts more emphasis on how environmental, social, and
governance (ESG) factors can be used in business processes. Lead by Larry Fink, BlackRock
is a company that supports the idea that businesses should do more than just make money;
they should also do good things for society (Deshpande et al., 2020). The common belief that
businesses' main goal is to make as much money as possible is called into question by this
paradigm shift. It also shows how important environmental, social, and governance factors
are for ensuring long-term growth and societal effect (Fink, 2019).

Alignment with Corporate Strategy

BlackRock shows that its purpose is in line with its business plan by agreeing to standards for
governance, social issues, and the environment. The company uses these ideas in its
investment care as part of its investment management to encourage openness, responsibility,
and long-term growth across all of its investments. BlackRock can make sure it meets its
strategic goals by using responsible investment strategies that think about how their actions
will affect people and the environment in the long run.

 Assets Under Management (AUM): $6.8 trillion as of June 2019 (Deshpande et al.,
2020, Exhibit 2).
 Growth: BlackRock's AUM grew from $24 billion in 1994 to $6.8 trillion in 2019
(Deshpande et al., 2020, Exhibit 1).

Stakeholder Engagement and ESG

BlackRock's ESG goals are met by using a wide range of methods to involve all members of
the community. In order to do this, it has to talk to the companies it invests in and try to get

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them to implement environmentally friendly practices. BlackRock makes sure that its
environmental, social, and governance (ESG) goals are met by involving many stakeholders,
such as owners, workers, customers, and communities. This also makes sure that the long-
term goals of these stakeholders are in line with the company's broad goals.

 Annual Engagements: 2,049 company engagements in 2018 (Deshpande et al., 2020,

Exhibit 4).
 Voting Statistics: BlackRock voted on 158,942 proposals in 2018, with a significant
focus on governance (Deshpande et al., 2020, Exhibit 4).

Financial Impact and ESG Metrics

The way BlackRock makes money can be measured by the actions that are driven by a
meaningful purpose. Green, social, and governance (ESG) factors are a part of BlackRock's
investing approach that help lower risk and boost long-term returns. A smaller carbon
footprint, more diverse boards of directors, and other signs of sustainability are some of the
most important ESG factors. These indicators are always being looked at to see how they
affect the company's finances.

 Index Funds: Approximately 90% of BlackRock’s investments are in index funds,

highlighting their commitment to low-cost, sustainable investment options
(Deshpande et al., 2020, Exhibit 3).
 Financial Performance: BlackRock has delivered over 3800% in total returns since its
IPO in 1999 (Deshpande et al., 2020, Exhibit 1).

Challenges and Opportunities in Purpose and ESG

Investors don't trust BlackRock, and it's hard to figure out how the company affects the
environment, society, and government (ESG). Despite this, these problems also bring
opportunities. For example, they can help find new donors who care about doing good and

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lower long-term risks by putting in place sustainable operations. BlackRock can solve
problems and take advantage of possibilities by being proactive with companies about
environmental, social, and governance (ESG) issues.

Comparison with Industry Standards

BlackRock sets the standard for ESG integration in the business, which sets it apart from its
rivals. When it comes to environmental, social, and governance (ESG) values, BlackRock
sets the bar very high. Other asset managers are now starting to follow suit. Some of these are
full reporting on environmental, social, and governance issues (ESG), active community
participation, and a commitment to being open.

 Industry Ranking: BlackRock is the largest asset management firm globally, with
AUM significantly higher than its closest competitors (Exhibit 1).

ESG Reporting and Transparency

Reporting and being open about environmental, social, and governance (ESG) issues is very
important to BlackRock. The company regularly shares its environmental, social, and
governance (ESG) policies, along with information about how these policies affect the
business's bottom line. Being open about BlackRock's environmental, social, and governance
(ESG) activities is important for keeping the trust of stakeholders and making sure that these
activities are successful and responsible.

Ethical Considerations in Purpose and ESG

As part of BlackRock's purpose-driven projects, social issues must be taken into account. By
promoting moral standards, good corporate governance, and social duty, the company makes
sure that the investments it makes meet those standards. The way BlackRock makes business
decisions about investments and deals with client firms shows that it takes an ethical
approach.

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Future Strategies for Purpose and ESG

To make it easier for purpose and environmental, social, and governance (ESG) factors to
come together, BlackRock should keep coming up with new ways to report on ESG factors
and make investments that are good for the environment. Plans for the future might include
putting more money into tools that are good for the environment and keeping up the pressure
for changes in the law that support environmental, social, and governance (ESG) goals. In the
future, these projects will need to deal with problems like standardizing indicators for
government, social issues, and the environment.

 Future Investments: Potential increase in investments in green technologies and

sustainable business models.

Reflection on Purpose, ESG, and Industry Impact

BlackRock's choice to combine ESG and purpose in their business has had a huge effect on
the asset management industry. By showing that it is possible to be both financially
successful and socially responsible at the same time, BlackRock sets a bar for ethical
business behaviour. This approach not only leads to better long-term growth, but it also helps
achieve bigger social goals. Because of this, BlackRock is a leader in its field.

Conclusion

The BlackRock case is used to show how purpose and environmental, social, and governance
(ESG) factors can have a huge impact on a company's strategy and success. BlackRock is
able to improve its financial success and set a new standard for responsible investment in the
asset management industry by aligning its business operations with social goals.

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References

 Deshpande, R., Dey, A., & Serafeim, G. (2020). BlackRock: Linking Purpose to
Profit. Harvard Business School Publishing.
 Fink, L. (2019). Larry Fink’s 2019 Letter to CEOs.
https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

Appendix

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