Is Larry Fink’s Letter a Wake-Up Call for Safety?
By Eric Michrowski and Dr. Josh Williams, Propulo Consulting
Too Many People Are Dying on the Job: Will a Focus on ESG Help Reverse this Trend?
Larry Fink’s annual letter to CEOs has been observed and assessed in Boardrooms across America for many years. As BlackRock’s CEO, he steers an $8tn-plus financial behemoth, a major shareholder in most big companies around the world, that has the capacity to move markets and influence Corporate strategy.
This year, Larry’s letter points a very clear focus on Environmental, Social, and Corporate Governance (ESG) themes, steering BlackRock into greener waters. While his poignant letter primarily focuses on the Environment, he also highlights broader purpose themes such as companies shortchanging safety.
He clearly articulates that his letter wasn’t written for environmental reasons but rather in a fiduciary responsibility for other people’s money. He highlights a “tectonic shift” in the investment landscape that is happening much faster than expected as investors are reallocating capital towards companies with robust practices, giving them an ability to perform better than their peers and enjoying a ‘sustainability premium’.
Over the past few weeks, similar ESG themes emerged from a group of 30 of the world’s largest asset managers.1 Additionally, Exxon shared that it was considering board changes to help push the company on a more sustainable financial footing2 and Robert S. Kaplan and David McMillan drove significant impact to businesses with their work on Balanced Scorecards just published an HBR article called “Reimagining the Balanced Scorecard for the ESG Era”.3
Mr. Fink’s powerful letter is a call to action in the financial community for openly and aggressively addressing climate change. His specific examples of insufficient municipal infrastructure, drought and flooding, and other impacts from this existential threat are tied directly to not just our long-term survival, but to immediate dangers regarding financial stability with inflation, interest rates, insurance premiums, and even 30-year mortgages. The onus cannot solely be on government agencies to tackle this worsening problem. BlackRock’s SASB and upcoming TCFD-aligned reporting will promote more corporate responsibility and financial accountability for executives to take ownership over this looming crisis. It encourages organizational leaders to use their influence for the greater good of humanity along with our financial well-being.
Within this ESG framework, worker safety and health need to also be addressed. Mining safety was briefly cited in the article, but it is critical to understand that people are being seriously injured and killed on the job at alarming rates. Despite tremendous advances in safety knowledge, advanced analytics, and technology, there were nearly 3 million workplace injuries (many life-altering and life-ending) in 2019 alone.4 From a business perspective, these incidents cost U.S. businesses 250 billion dollars a year.5 Although workplace incident rates have steadily declined by 28% over the last decade, rates for serious injuries and fatalities (SIFs) have remained virtually unchanged.4
Executive leaders have a moral responsibility to protect the people who drive organizational success and robust financial benefits. Right now, too many workers are dying on the job or are experiencing life-altering injuries. For organizational leaders, establishing safety rules and providing adequate PPE is simply not enough. Leaders need to take more personal ownership for improving safety culture to prevent SIFs. It’s smart business and the right thing to do. Like climate change and other ESG issues, leaders have the power and responsibility to make both immediate and lasting change to protect people.
The current focus of major financial powerhouses on these important topics of how profits are secured will hopefully help Safety Leaders invest in achieving the next level of performance as Boards and Boardrooms across America increase transparency on how they deliver profits.
At Propulo, we coach leaders to focus on prosocial safety behaviors and avoid pitfalls that derail safety efforts. We can help your leaders stay on track and make step change improvements in your safety performance. For more information on this topic, read about Safety & Safety Culture at Propulo Consulting.
- Fidelity, UBS Join Investors Making $9 Trillion Net-Zero Pledge, Bloomberg, December 11, 2020. https://www.bloomberg.com/news/articles/2020-12-11/fidelity-ubs-join-investors-making-9-trillion-net-zero-pledge
- Exxon considers capex cuts and board shake-up, Financial Times, January 27, 2021. https://www.ft.com/content/77a94c24-9002-4af0-b265-61d9656159d0
- Kaplan, R., & McMillan, D. (2021). Reimagining the Balanced Scorecard for the ESG Era. Harvard Business Review. February 2, 2021.
- Bureau of Labor Statistics (2020). https://www.bls.gov/news.release/pdf/osh.pdf
- Eisenbrey, R. (2013). Workplace injuries and illnesses cost U.S. $250 annually. Economic policy institute. https://www.epi.org/publication/workplace-injuries-illnesses-cost-250-billion/