Larry Fink (BlackRock) (Nov 2020)

Larry Fink (BlackRock Co-founder) – BlackRock and Citibanamex in Dialogue (Nov 2020)

Chapters

00:00:01 BlackRock and Citi: A Conversation on Global Economics

00:02:15 The Evolution of BlackRock: From a Humble Office to a Global Investment Giant

00:11:50 COVID-19's Impact on the Global Economy and Supply Chains

The Uneven Impacts of COVID-19:
* The COVID-19 pandemic has greatly affected different industries and societies, resulting in uneven impacts.
* Some sectors, such as technology, financial services, and home-related industries, have experienced growth and success.
* In contrast, industries reliant on human interaction, like hospitality, travel, transportation, and entertainment, have suffered significant losses.

Social Consequences:
* The economic disparities exacerbated by the pandemic have led to increased inequality and social issues.
* The job losses and financial hardships faced by low-wage workers and those in the informal economy are particularly concerning.
* The long-term consequences of these economic disparities require attention and action to promote a more equitable global economy.

Remote Work and Urban Dynamics:
* The pandemic accelerated the trend towards remote work, with many companies realizing its benefits and adopting hybrid work models.
* This shift has implications for urban centers, as reduced commuting could alleviate congestion, air pollution, and improve the quality of life for workers.

Supply Chain Reevaluation:
* The pandemic disrupted global supply chains, prompting companies to re-evaluate their strategies.
* Redundant supply chains are being considered to mitigate risks and ensure resilience.
* Mexico, with its strategic location and skilled workforce, is well-positioned to attract companies seeking alternative manufacturing destinations.

Mexico’s Opportunities and Challenges:
* Mexico’s advantages include its proximity to the United States, a competitive labor force, and established manufacturing industries.
* However, security concerns and the need for diversification beyond energy dependence remain challenges that require attention.
* Mexico’s potential for growth and development in technology-related manufacturing should be explored and promoted.

Conclusion:
The COVID-19 pandemic has highlighted the need for societies to address economic disparities, promote remote work opportunities, reevaluate supply chains, and explore new avenues for growth. Mexico, with its unique advantages, has the potential to emerge from this crisis as a stronger and more diversified economy.

00:23:28 Leveraging Mexico's Trade Relationship with the US for Tech Supply Chain Innovation

00:25:35 Climate Change and Sustainability as Investment Risks and Opportunities

Larry Fink’s Sustainability Journey:
Larry Fink initially focused on environmental issues as a board member of the Global Nature Conservancy but hadn’t connected climate change to BlackRock’s investment strategies.

Witnessing the Impacts of Climate Change:
Personal experiences in Alaska, Botswana, and the Great Barrier Reef in 2019 revealed the tangible effects of climate change, prompting Fink to reconsider its investment implications.

Client Conversations and Realization:
Discussions with clients emphasized the growing intersection of finance and climate change, leading Fink to realize that BlackRock needed to focus more on sustainability.

Climate Change as Investment Risk:
Fink recognized the increasing evidence that climate change posed investment risks and prompted BlackRock to request public companies to report on their sustainability efforts under SASB and TCFD frameworks.

Sustainability as a Lens for Investment:
BlackRock’s investment approach shifted to incorporate sustainability as a lens, acknowledging its impact on investments and the need for investment technology to understand it.

Accelerating Sustainability:
The COVID-19 pandemic further accelerated the push towards sustainability, highlighting its importance as an existential health and property risk.

Increased Sustainable Investment Flows:
BlackRock witnessed a surge in sustainable ETF flows, indicating investor interest in sustainability-focused investments.

Sustainability Reporting and Transparency:
Following Fink’s request for public companies to report on sustainability metrics, there was a 400% increase in companies reporting under SASB.

Examples of Energy Transition:
Nexera, a Florida-based renewable energy company, surpassed Exxon Mobil as the largest energy company in the United States based on market capitalization. Texas, traditionally known for hydrocarbons, now has more jobs in sustainable energy than in hydrocarbons, demonstrating the economic potential of renewable energy.

Sustainability for Developing Countries:
Fink acknowledged the argument that sustainability may seem less pressing for developing countries focused on economic growth.

Opportunities in Developing Countries:
Developing countries with abundant sunlight and wind resources can leverage renewable energy to promote economic development and environmental sustainability.

China’s Focus on Clean Environment:
Chinese leadership recognizes the demand for a cleaner environment from its population, indicating a growing commitment to sustainability.

Mexico’s Solar Potential:
Mexico’s abundant sunlight makes solar energy more cost-effective than natural gas, providing opportunities for sustainable development.

Leapfrogging and Broadband:
Developing countries can leapfrog traditional infrastructure development and rapidly adopt advanced technologies like broadband.

Broadband as an Imperative:
Fink emphasized the importance of broadband access in every home, particularly for children’s education and bridging the economic divide.

Call for Broadband Access:
Fink urged leaders in the United States and Mexico to prioritize broadband access for all households, considering it an imperative for the future.

00:36:34 Globalization: Past, Present, and Future

00:42:01 Global Interconnections Driving Growth and Opportunity

Abstract

The Future of Finance and Economy: BlackRock and Citibatomax’s Vision for Mexico and Beyond

Exclusive Conversation with Larry Fink and Ernesto Torres Cantu

Ernesto Torres Cantu welcomed everyone to the event, introducing the speakers, Larry Fink and himself. He emphasized City Banamex Patrimonial y Privada’s goal of being the best financial advisors in Mexico and highlighted their distribution agreement with BlackRock, the largest asset manager globally. Larry Fink expressed his delight in participating in the conversation and regretted not being able to have a more relaxed conversation in person. Torres mentioned Fink’s reputation for bringing good wine, adding a lighthearted note to the discussion.

BlackRock: A Beacon of Client-Centricity and Long-Term Vision

In their conversation, Fink outlined BlackRock’s founding principles: unwavering client focus, proprietary risk analytics, and a unified technology platform. These principles have been pivotal in navigating crises like the 2008 financial downturn and the COVID-19 pandemic, where Fink stressed the importance of long-term investment strategies over short-term market fluctuations. BlackRock’s unique approach of not competing with clients and prioritizing long-term investing has set it apart in the global financial landscape.

The COVID-19 Paradigm Shift

The COVID-19 pandemic emerged as a central theme, having accelerated technology adoption and transforming global business operations, lifestyles, and consumer habits. This led to a ‘K-shaped’ economy, with certain sectors thriving while others floundered. BlackRock’s robust technology infrastructure was crucial in this context, enabling seamless remote operations across 16,500 home offices in 30 countries.

Mexico in the Global Economic Tapestry

The pandemic’s economic impact created a stark divide, notably impacting industries dependent on human interaction while propelling sectors like technology and online retail. This shift also brought significant implications for remote work, suggesting a permanent move towards a more flexible and distributed workforce, potentially easing traffic congestion and reducing pollution. Moreover, the pandemic highlighted vulnerabilities in global supply chains, prompting a reevaluation towards diversification. Mexico, with its strategic location, skilled workforce, and competitive costs, stands poised to benefit from this shift, particularly in technology manufacturing.

Fink’s Sustainable Vision

Fink’s personal experiences with climate change have shaped his vision for sustainability, leading BlackRock to place it at the core of its investment approach. He highlighted the importance of sustainability reporting and recognized the potential for developing countries like Mexico to lead in sustainable development. This approach aligns with the need for universal broadband access to bridge the economic divide, a point Fink emphasized as critical for future success.

Globalization and Mexico’s Unique Position

Fink addressed the changing nature of globalization, noting its benefits and drawbacks. He sees Mexico as a key player in the new global economic order, benefiting from deglobalization and nearshoring due to its proximity to the US and Canada. For Mexico to fully capitalize on these opportunities, investments in education, infrastructure, and safety are paramount.

Concluding Insights: Mexico’s Promising Horizon

In conclusion, Fink’s dialogue with Torres, set against the backdrop of BlackRock’s partnership with Citibatomax, highlighted Mexico’s potential as a critical hub in the global economy. Fink’s personal connection to Mexico, along with his professional insights, paints a picture of a nation on the cusp of significant economic transformation, buoyed by its strategic position, technological advancements, and a growing emphasis on sustainability and education. This blend of financial expertise, technological evolution, and sustainability focus offers a roadmap for Mexico and similar emerging economies, highlighting the vital role they play in shaping the future of global finance and economy.

Globalization’s Importance for a Secure World

Larry Fink emphasizes the importance of globalization for a more secure world. He believes that interconnectivity through increased business collaboration fosters dialogue and understanding among nations.

Economic Interdependence Between Countries

Fink cites the example of the United States and China, highlighting their substantial economic commerce despite tensions. He suggests that dependencies between countries are growing, not slowing down.

Mexico’s Unique Position and Opportunities

Mexico’s proximity to the United States and secure trade agreement present significant opportunities for growth. The rise of remote work opens up possibilities for developing Mexico’s beaches and attracting international professionals.

Mexico’s Potential as a Manufacturing Hub

Mexico has the potential to become a game-changer in the technology industry if it can create efficient supply chain navigation for technology products. The U.S. and Mexico share the largest trading relationship between any two countries, providing a strong foundation for logistics and infrastructure. Mexico possesses a high-quality manufacturing sector and a skilled workforce. The country needs to effectively communicate these advantages and attract investments to further develop its manufacturing capabilities. Citibatomax, with its extensive footprint and global connections, is well-positioned to promote Mexico’s manufacturing potential. The organization can effectively communicate Mexico’s strengths to potential investors, including Asian manufacturers seeking to expand in North America.

Larry Fink’s Commitment to Sustainability and the Influence of Climate Change on Investment

Larry Fink initially focused on environmental issues as a board member of the Global Nature Conservancy but hadn’t connected climate change to BlackRock’s investment strategies. Personal experiences in Alaska, Botswana, and the Great Barrier Reef in 2019 revealed the tangible effects of climate change, prompting Fink to reconsider its investment implications. Discussions with clients emphasized the growing intersection of finance and climate change, leading Fink to realize that BlackRock needed to focus more on sustainability. Fink recognized the increasing evidence that climate change posed investment risks and prompted BlackRock to request public companies to report on their sustainability efforts under SASB and TCFD frameworks. BlackRock’s investment approach shifted to incorporate sustainability as a lens, acknowledging its impact on investments and the need for investment technology to understand it. The COVID-19 pandemic further accelerated the push towards sustainability, highlighting its importance as an existential health and property risk. BlackRock witnessed a surge in sustainable ETF flows, indicating investor interest in sustainability-focused investments. Following Fink’s request for public companies to report on sustainability metrics, there was a 400% increase in companies reporting under SASB. Examples of Energy Transition: Nexera, a Florida-based renewable energy company, surpassed Exxon Mobil as the largest energy company in the United States based on market capitalization. Texas, traditionally known for hydrocarbons, now has more jobs in sustainable energy than in hydrocarbons, demonstrating the economic potential of renewable energy.

Appreciation for Citi Banamex and Ernesto Torres Cantú’s Leadership

Fink expresses gratitude for Citi Banamex’s partnership with BlackRock and praises Ernesto Torres Cantú’s leadership. He acknowledges the strong foundation established between BlackRock and Citi, emphasizing their close professional and personal ties.

Fink’s Personal Connection to Mexico

Fink reveals his deep affection for Mexico, recalling his backpacking journey from Los Angeles to Mexico City at the age of 15. He expresses his hope for safety and strength for all during challenging times, emphasizing the importance of emerging from difficulties with renewed resilience.

Globalization, Education, and Conscious Capitalism

Larry Fink emphasizes the potential of technology to empower education and uplift society. He stresses the responsibility of governments and businesses to foster conscious capitalism that promotes equal opportunities. Fink acknowledges the positive effects of globalization in raising living standards worldwide. However, he recognizes that globalization has also left people in developed countries behind. Fink argues that globalization is undergoing a transformation. He believes that the mantra of consumerism and cheap manufacturing has shifted, leading to deglobalization and onshoring. Fink emphasizes the importance of education in preparing individuals for the evolving job market. He believes that countries must prioritize education to enable their workforce to thrive in new technologies. Fink sees Mexico as a potential beneficiary of deglobalization and onshoring. He highlights the advantages of Mexico’s proximity to the US and Canada, as well as its favorable trade agreements. However, Fink stresses the need for Mexico to invest in education and ensure a safe environment for its workforce.

Notes by: ChannelCapacity999

Larry Fink (BlackRock Co-founder) – BlackRock and Citibanamex in Dialogue (Nov 2020)

Chapters

Abstract

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