Good Governance? Why we must not leave Larry Fink in charge of interpretation.

offener brief

Dear readers of GermanBoardNews,

BlackRock CEO Larry Fink has written his annual “CEO Letter” again, and it is all about climate protection. From my point of view, this is hardly surprising, but perhaps I have already gotten used to the fact that Fink sounds like a left-wing critic of capitalism.

But this habitus should not tempt anyone to smile at him or to take his messages lightly. His wake-up call is justified, and it must be clear to every supervisory and executive board member by now at the latest: The pressure from investors is increasing massively, and this will already be noticeable in the upcoming AGM season.

There is therefore no way around companies creating more transparency in terms of emissions – and introducing convincing and decisive measures to reduce them. Incidentally, this also means that we need more climate competence on supervisory boards.

Why Fink deserves constructive criticism from supervisory boards

Regardless, however, an old question arises with new urgency: who defines what “good corporate governance” is? Given the attention Fink’s letters are receiving, the impression suggests itself: It’s investors – and not, say, the so-called Government Commission, which has also recently spoken out (but largely unnoticed) on the subject of sustainable corporate governance.

As loyal readers know, I am skeptical of the Government Commission. But if institutional investors are now setting the guardrails for publicly traded companies instead, we’ll be jumping out of the frying pan into the fire. Because let’s not forget: even if they sound like Larry Fink, they are all about returns – and that makes long-term entrepreneurial thinking difficult.

I therefore maintain that supervisory boards and management boards need to get much more involved in the debate. Good governance only works WITH decision-makers, not AGAINST them. So let’s develop our own standards and courageously put them up for discussion. Larry Fink deserves constructive suggestions to add to, improve and sometimes challenge his demands.


Yours, Peter H. Dehnen