“Follow the money” is a catchphrase that was popularized by the 1976 movie, “All the President’s Men.” While the directive helped Robert Redford and Dustin Hoffman’s characters of Woodward and Bernstein sniff out political corruption during the Watergate investigation, the words might also be instructive for helping predict the future of the waste and recycling industries, as well as the economy at large.
Regardless of the will of the American people, change is often slow to occur in business or politics if there isn’t financial incentive. And while sustainability is a buzzword that both companies and government representatives have given lip service to for years, real change to the status quo hasn’t come easy or expeditiously.
According to Laurence Fink, chairman and CEO of BlackRock, the New York City-based global investment management goliath, that could soon change.
In two recent letters authored by Fink to clients and global CEOs, Fink makes the case that sustainability is the criteria for which companies will soon be judged.
In his letter to clients titled, “Sustainability as BlackRock’s New Standard for Investing,” Fink writes:
“Over the past few years, more and more of our clients have focused on the impact of sustainability on their portfolios. This shift has been driven by an increased understanding of how sustainability-related factors can affect economic growth, asset values and financial markets as a whole. … Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products and engages with companies. We believe that sustainability should be our new standard for investing.”
In his letter to CEOs titled, “A Fundamental Reshaping of Finance,” he continues:
“Over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing skepticism from the markets, and in turn, a higher cost of capital. Companies and countries that champion transparency and demonstrate their responsiveness to stakeholders, by contrast, will attract investment more effectively, including higher-quality, more patient capital.”
In essence, Fink is saying that those institutions that refuse to take a proactive approach to going green will soon be left behind.
For the waste and recycling industries, this transformational shift could directly result in more demand for recycled materials, greater landfill diversion mandates, more LEED and green building projects and a more forthright approach to extended producer responsibility.
You don’t become the world’s largest asset manager (over $7 trillion in assets under management and counting) by misjudging trends. The future of more conscientious business practices is on the horizon, and with it, a whole new world of opportunity for waste and recycling professionals who are ready to take advantage.