Shining New Light on Human Capital

In this CEO Letter from the March/April 2021 issue of Directorship magazine, NACD CEO Peter Gleason reflects on Larry Fink’s 2021 letter to CEOs and notes that boards have a role to play in reporting on workforce issues and holding their companies and themselves accountable. Read the full issue on human capital management today.

“Despite the darkness of the past 12 months, there have been signs of hope, including companies that have worked to serve their stakeholders with courage and conviction.” So writes Laurence D. Fink, CEO of BlackRock, the world’s largest asset manager, in his 2021 “Dear CEO” letter, which calls on companies to maintain this momentum of positive change. 

Of all the stakeholders affected by COVID-19, employees are arguably the most vulnerable. Although Fink’s letter focuses on the goal of carbon emission reduction (net zero by 2050) and related disclosures, he does not ignore the human element. 

In fact, Fink says, the “E” and “S” in ESG interrelate. “Improved data and disclosures will help us better understand the deep interdependence between environmental and social issues,” he writes. Fink is a proponent of the framework from the Sustainability Accounting Standards Board, which he recommends along with that of the Task Force on Climate-related Financial Disclosures. 

Importantly, Fink’s letter also calls for more disclosure on how human capital contributes to company value. “A company that does not seek to benefit from the full spectrum of human talent is weaker for it,” says Fink. Such a company is “less likely to hire the best talent, less likely to reflect the needs of its customers and the communities where it operates, and less likely to outperform.” Therefore, he urges “company disclosures on talent strategy that fully reflect your long-term plans to improve diversity, equity, and inclusion.” Every day, I see that more companies are holding themselves accountable, releasing transparency reports and voluntarily reporting on the composition of their workforces. The board has an indispensable role to play, and NACD sees a bright future for business as we deliver on our goal to advance the knowledge of professional directors. 

All of our programs—from Accelerate to NACD Directorship Certification—are designed to support and enhance our mission to educate both current and future directors so that they are capable of leading with confidence and are prepared to meet the formidable challenges of the future, including those identified by Fink in his inspiring letter.