Institutional investors urged to embrace ESG: BlackRock

By Lee Min-hyung

BlackRock Managing Director Henny Sender

A senior official from BlackRock has urged institutional investors here and abroad to embrace environmental, social and corporate governance (ESG) factors as part of their risk management efforts.

BlackRock Managing Director Henny Sender said the COVID-19 pandemic increased momentum for the eco-friendly drive in the investment industry. She said investors from both the private and public sectors should realize the importance of ESG and make concrete efforts to embrace it for their sustainable growth.

“On an objective level, to not think about ESG is a big risk,” she said during a webinar hosted by the Institute for Global Economics, Tuesday.

“So in a way, it's all about risk management as an institutional firm who is a fiduciary for our clients' money. It's a kind of risk management and a smart policy when you invest. Capitalists and companies cannot just take a short-term view about maximizing shareholder benefits.”

Starting from March last year when the global economy was hit hard by the coronavirus pandemic, the notion of ESG has emerged as one of the most crucial management drives for companies and investors worldwide.

Chiefs of Korea's major conglomerates are also reiterating their strong commitment to ESG, identifying it as a crucial factor for co-prosperity with society and the environment.

The BlackRock director said more companies and investors should be willing to establish a longer-term ESG roadmap for their sustainable growth. She has particularly underlined the need for them to take preemptive steps to combat climate change.

BlackRock is one of the world's most influential investment companies that is seeking to bring in ESG approaches when mapping out investment strategies.

The company believes proper handling of sustainability issues determines a firm's long-term financial performance.

She also shared her views on a variety of other financial topics ― such as an overheating global stock market. Sender said the widening gap between the booming stock market and sluggish real economy may keep deepening in the foreseeable future.

The volatile nature of the global financial market will also remain in place for the time being amid the prolonged low interest rate, according to her.

Regarding the issue of the U.S. government's strong pump-priming measures, it remains to be seen whether the Joe Biden administration's $1.9 trillion COVID-19 stimulus plan will be able to generate tangible results, she said.

The official raised the possibility that the stimulus plan might draw criticism, as the measure may end up widening the gap between rich and poor.