Globalism at a crossroads

  • BlackRock

To kick off the Future Forum, CNN Anchor Becky Quick moderated a conversation with Microsoft CEO Satya Nadella and BlackRock CEO Larry Fink. In addition to sharing their views on the future of globalism, the two leaders touched on many of the themes that were explored throughout the Future Forum, including how geopolitical tensions are impacting business operations, the role of corporate purpose and the move to sustainable investing.

After the conversation, Kate Moore, BlackRock’s Head of Thematic Strategy, provided perspectives on how the evolution of globalization is affecting the current investment landscape.

  • Becky Quick: Zach, thank you very much, and welcome everybody.  It is a pleasure to be here with you today.  I want to introduce our panel and what we’re talking about today.  It’s the future of globalism, and Larry, Satya, it’s great to be here with both of you.  Larry, I’ve been thinking about globalism, and just a few years ago it seemed like things were going so global.  You had borders coming down.  You had people and technology and companies moving across countries seamlessly, but that seems to have been part of the big reason that the coronavirus has replicated so quickly, too, and we’ve definitely seen a pullback since that time.  When you’re on the ground, what do you hear in terms of what governments and companies are thinking these days, and what do you think about the future of globalism?

    Larry Fink: Well, let me start off and say, Satya, thank you for joining us, and Becky also thank you for allowing yourself to take this time.  The future of globalism is intact, but it’s evolving.  It’s changing.  It’s going to be adapting with societies and societies’ needs.  But let’s be clear: Globalization has helped more people in society than any other economic forum.  And yet globalization has left some segments of society behind, and so that’s why I said globalization has to change and evolve.  And technology is going to accelerate globalization in many ways and inhibit globalization.  Right now, we’re seeing the impact, and also because of COVID, as you framed the question.  We’re seeing redefining supply chains.  But the supply chains are being redefined because of technology, and we were seeing the trend of more onshoring of some manufacturing products.

    We’re seeing moving supply chains closer to demand, so that evolution has already occurred.  It may be accelerating now, but let’s be clear.  I think even now the sharing of science related to COVID is a good example of how globalization can accelerate humanity.  And so we’re all learning to adapt with it.  We’re all trying to become a part of it, and let’s be clear.  If we don’t focus on globalization and the positive impacts of globalization, we are going to leave billions of people in society and different countries behind.  And so if we are still humanists, and I think we all are, we have to work with our societies here in the United States, in Europe and Asia.  But we all need to be working together to build a more holistic world.  And I know that’s not fashionable at the moment, and we’re all focusing on nationalism and make America first.  I believe we still can make America first, using that phrase, but in the context of globalization as a positive force.

    Becky Quick: Hey, Satya, let’s just talk a little bit about what you’ve seen and how this really accelerated how humanity uses technology.  I can’t believe how many ways I am reliant on so many products like Microsoft Teams and all kinds of other things that I was not using on a regular basis before, but now I use them every day.  What have you all seen at Microsoft?

    Satya Nadella: It’s fascinating, Becky.  First of all, thank you, Larry for having me and Becky for you moderating the session.  It’s unprecedented.  I mean if somebody had described this world to me even as late as February of this year, I wouldn’t have been able to sort of come up with what we’re going through.  I mean the speed with which some of these technologies of scale.  In fact, I would say if you measured it by the amount of economic activity, I know a lot of economic activity has been stalled.  We see the impact.  After all, we just traded 20% of our GDP to keep us going.

    But that said, I shudder to think even what the world would have looked like without some of the infrastructure like Cloud or like the collaboration tools that we use every day.  I mean it’s unbelievable to me.  So I think of it as in three phases, Becky.  They’re all happening in parallel.  There was the response phase.  There is the recovery phase.  There is the re-imagine phase, and in all of these phases, technology is creating both the conditions for business continuity.  I mean during the response phase, if you think about it, the biggest challenge was how do we continue to work, but most importantly, the critical parts of our economy, the first responders.  So we became the digital first responders to the first responders out there whether it’s in healthcare, whether it’s in public sector.

    And so the idea that technology can help the continuity of business, that’s been the most important thing.  Now, as we start thinking about hybrid work in the recovery, in the re-imagine, we start seeing some of the structural change.  Take even what’s happening in retail.  Omnichannel retail was there before.  Guess what?  Omnichannel retail will take new shape now.  What’s happening online?  How does it get consummated in some contactless drop-off, and so on?  So the idea that we will now start seeing bi-business process, in other areas, telemedicine.

    Telemedicine has been something we’ve been talking about for 20 years, 30 years.  Guess what?  Telemedicine now is mainstream.  Basically when every hospital shut down for COVID, all of their outpatient activity, in fact, moved to telemedicine, and so that’s the type of – and it’s not going back to normal.  In fact, an AI triage tool to a telemedicine consult then showing up in the hospital is going to become a norm, and so these are good changes.  These are going to be helpful even in terms of us taming the healthcare costs.

    Becky Quick: So Satya, Larry just said that he doesn’t think globalization is dead, that it’s going to continue.  It’ll evolve.  But do you think technology is going to be a huge part of the reason why and just the means for how that happens?  Do you agree with what he said?

    Satya Nadella: In fact, I liked Larry’s even overall framing.  You see, in fact, I think perhaps one of the biggest mistakes we made whenever the Berlin Wall fell was to talk about it as if it was end of history.  If anything, it should have been just, hey, the continuation of history, and globalization has been there.  It didn’t start in ’89.  It has been there all throughout human history.  The question is how do we adjust even for some of the unintended consequences of globalization?  If anything, I think we all are as “multinational companies” have to be grounded on what happened in that phase of globalization.  A lot of businesses got created.  A lot of the middle class in Asia was able to make progress or recreate it.

    But at the same time, communities in the United States were also devastated because of jobs going away and those communities not having the ability to move up the social ladder and the economic ladder.  So now in this next phase, as a multinational company grounded in that fact, so I believe my license to operate whether it’s in the US or in the UK or in India or what have you, comes because something else that Larry has been talking about because we are creating local surplus.  Companies can’t be just out there.

    They have to be where they are living and working and contribute, and so that to me is what I take away, and technology – in fact, if you go back even to David Ricardo, the idea that somehow countries don’t have a comparative advantage, which, when added up with the other country can, in fact, create more surplus for people in those communities, that would be crazy in my opinion.  So, therefore, I think globalization will continue, but we also and especially in business, also need to talk about the real issues that got created in, say, the last phase of globalization and how we’re going to address them.

    Becky Quick: Let’s talk about one of those issues, and that might be something that we’ve traded around the globe as well, the fiscal and monetary policy to deal with some of the problems, huge economic fallout that has come from this and that what we saw happen last time with the Federal Reserve and other central bankers when we saw this back in 2008, 2009 step in to try and do these things, one of the unintended consequences that – was that it made wealthy people eve wealthier by trying to preserve assets and hold things up.  And so I kind of wonder what happens this time around.  Larry, you talk to a lot of these central bankers all the time.  You are a student of the markets and an expert on kind of maneuvering all this.  What do you think we – the potential unintended consequences could be?

    Larry Fink: And we’re engaged with five different central banks right now in helping them with their policy formation.  So there’s no question.  Monetary policy has been the dominant tool for stabilization of the world, and monetary policy monetizes financial assets.  And financial assets have done better than any form of assets.  In post-2008, it’s certainly what we witnessed since the Federal Reserve and other central banks began their policies.  And so there’s no question the wealthy people who own financial assets are the big – are huge beneficiaries, and that’s the first line.

    The reality though, monetary policy stabilized so many great American companies, so it’s not invisible.  But a company like Boeing that at one point had a $350 million – $350 share price, and at one time in the second week of March of this year, it was in the 80s.  There was questions about Boeing and its viability, and it was just the fears that were going on during the worst weeks of March.  And in the third week of March, the Federal Reserve announced their intended programs.  We announced a trillion-and-a-half-dollar fiscal stimulus with more to come.  Other countries did the same.

    And three weeks from the low point of Boeing, Boeing was able to access the private capital markets on government support and raised$25 billion, and that stabilized Boeing.  Boeing has been able to use that money to not only buttress its financial sources but also its suppliers.  And so the key – the very difference between today’s monetary policy function and 2008 was the monetary policy, as the fiscal policy, results in all about preservation of jobs, and in every conversation I’ve had with every central banker and policymaker, how do we preserve jobs?  How do we create stability?  And through that obviously you see this big impact in the valuation of equities, but the job stability was enormous from the very low point in March.

    And I think those are the things we’re not emphasizing enough.  The actions, the positive actions, the aggressive actions of the central banks, and our treasury was enough to stabilize our economies.  It was able to stabilize hundreds and hundreds of companies, thousands of small businesses.  And I’m not saying we’re over it, and we still have a lot of structural problems today, but the actions were fantastic.  Now, the unintended consequences are going to be some companies – generally when you have deep recessions, we generally benefit from companies that fail because we have the resurgence of new companies.  We’re not going to see that.

    We are creating some structural imbalances in the long run, but I don’t – we shouldn’t care about the long run because if the policies work and we create new economic growth and we have a vital economy going forward, much of the unintended problems will not be as significant.  Unquestionably we’re going to have trillions and trillions of dollars added to our deficits, and ultimately that will be a big issue one day, and it will be a bigger issue if we don’t create growth in between that.

    And so I could spend the next 20 minutes talking about unintended consequences, but the reality is the fortitude of our policymakers, the fortitude of the policymakers elsewhere stabilized millions of jobs, but at the same time, it created huge wealth for those who own equities.  But we have to look at it in a measured way.  We have to look at it in the whole totality of what was done, and I would applaud our policymakers.

    Becky Quick: I would applaud them too, but I wonder how lasting some of these issues will be when you hear companies like United say that they may have to lay off half of their employees come the fall if things don’t turn around.  I guess the big question is…

    Larry Fink: Well, that means they’re probably going to need another – they did take government money.  The airline industry did that, and so it may take another one.  There are going to be a lot of companies that are going to be impacted by the disease curve, and right now we’re seeing a resurgence of the disease curve.  We’re seeing some rollback.  We’re seeing – and now we are restricting even people move from one state to another state, and so it does restrict travel.  And so there are rational reasons why they have to do that, and Americans are restricted to travel to Europe.  And so let’s be clear.  There are still some – as I said earlier, in some industries, we do have systematic problems that will still persist, but for many, many other companies, they feel a lot better today.  Their prospects in the future are far better than they were in March, and I would say thank you to our policymakers.

    Becky Quick: Hey Satya, let me ask you about tensions between the United States and China.  It’s certainly not new, but the rhetoric has dialed up recently, and I think that’s in large part because of what’s happening with the pandemic and the scare that has kicked off things.  How has that changed how you handle the supply chain, how you handle your customers, and how do you just deal with your own company, dealing with a global company?

    Satya Nadella: It is for sure – I think one of the issues coming out of this is definitely the relationship between the US and China but quite frankly US and European Union and what is happening between India and China.  There’s a lot going on in the world today whether it’s sort of nationalism, whether it is about national security, whether they’re legitimate interests each country has in terms of their own trade and what’s in their interest.  So the way I look at it, I go back, Becky, to say, okay, what does it mean for us to serve our customers where they are with the sort of types of networks and businesses that they have.

    For example, many multinational companies whether – let’s take a European multinational customer who is on our clock.  What they care about is Microsoft doing the job to help them operate both in China with the Chinese framework and the laws as well as in European Union and in the United States.  So we need to be where our customers expect us to be.  So that’s what – at least when we look at capital, when we think about our R&D, that’s sort of why I’m being practical about where the world is being reshaped and where are our customers expecting us to show up, and with what type of data sovereignty, what type of locality that people expect from us whether it’s employment locally, whether it’s data center operations locally.

    It’s just going to be the – in some sense you could say tech was one of those industries that didn’t face regulation.  Larry and everyone else in financial sector has always faced a lot of barriers and a lot of sort of local regulations, whereas tech had unfettered access to markets.  Those days are gone, and the idea that tech will now need to make sure that they have local operations, local jurisdictional relevance I think is going to be the case for us.

    Becky Quick: Gentlemen, you both talk an awful lot about corporate responsibility and what your companies need to do to step up in this world.  I think people have turned more and more to corporations in recent days and especially in the last several months, and I just wonder if you can address the idea of what it is that you think corporations should be doing and maybe talk about one or two things that you are doing to make sure that you’re involved with this.  Larry, why don’t we start with you?

    Larry Fink: As you know, I write these letters.  I’m already working on the 21 letter.  Stakeholder capitalism is becoming more and more important.  Satya talked about a license to operate.  This whole trend of de-globalization we have to prove in every part of the world.  We earn that license to operate every day.  COVID is an existential risk of health.  I wrote about climate change.  It’s an existential risk to health and so much larger, and I think the role of corporations are going to be even larger and larger.  Society is frustrated with government.  I wrote about that in the last two years, and I think society is looking for large corporations like Microsoft and BlackRock to play a bigger role.

    And, more importantly, our clients want us to play that role, and most importantly, if you don’t show a strong purpose, you’re not going to get the best and brightest young people joining your firm.  And so I do believe over the next 12 months we, as corporations, are going to have to be even more vigilant in terms of our role in society.  In the United States, we are going to have to show a great deal of what we are going to do about the social issues in our country.  I think there’s going to be great, great activism from the far left from different – related to social, and I do believe we are all going to have to play a bigger role.  We’re going to have to talk about how we are keeping our employees safe as we ask them to come back to the office.

    We do these surveys with our employees, and I know a few other companies just finished their surveys.  We do these surveys monthly.  The majority of your employees in the United States are still frightened to be coming back to the office.  As much as they want to get out, they are worried about public transportation.  They’re worried about going up and down elevators.  They’re very worried.  I believe one of the good positives out of this will also mean though we will never have 100% of the people back in our offices.  We’re going to rotate.  We’re going to be working there.  That’s going to be a good thing.  We’re going to actually improve the environment.  We’re going to have less city congestion.  Can you imagine New York and Seattle with less congestion?

    Becky Quick: Less traffic.

    Larry Fink: But anyway, the most important thing that I think we have to think about as leaders in companies more than ever, we have to show a little more emotionalism, and I’m very long emotionalism, so that’s okay.  But we also have to prove our actions with courage.  That is something that I’m saying loudly right now that we are going to have to be more courageous as a company, and those companies that are being identified, that are making these changes, that are really focusing on stakeholder capitalism, they’re going to be the huge winners in the future.  And the reluctant, non-courageous leaders in companies, they’re going to fall.  They’re not going to get the best and brightest young people.  Their clients are going to be pulling away from them.  So it’s – the thing about long-termism and long-term capital is going to accelerate more than ever, and we all are going to have to be a little more courageous.

    Becky Quick: Hey Satya, I know one of the issues that all corporations are kind of looking at right now is diversity and trying to make sure that their employee base represents their customer base and the rest of the world beyond that.  I had read recently that you were going to be make sure that Microsoft is reaching out to some of the historically black colleges and making sure you have better connections there, and I thought, wow, that’s the perfect sort of scientific logical way about going about doing this.  Would you tell us just a little bit more about that initiative?

    Satya Nadella: Sure.  I mean, well, I think as – to pick up on what Larry broadly said, I think this is the time for every one of us to have that sense of purpose not just in words but at the core of the business model.  It’s – and one of the things I describe it as Microsoft will do well if the world around us does well, and that has to be true.  That means what we do in the core, whether the products we produce, the business model we have leads to that broad success.  And diversity and inclusion is the same piece, Becky.  We have to represent the world if we want to serve the world internally.  So one of the things that we did, given the moment we’re living through when it comes to black and African-American experience in the country, let’s start with our own company.

    One of the things that has been, quite frankly, a massive learning moment I think for all of us, for sure for me, was just the limited experience of people of – who are black and African American in Microsoft, in Seattle, in the communities we live in and saying, okay, what are we going to do about, first, representation at all levels, inclusion at all levels?  And so that’s sort of the commitment we made, which is to say let us think about our own culture, our ecosystem.  So, for example, we spend a lot of money.  We have supplier programs that, for example, now have sustainability metrics.  Let’s even have representation metrics, so we are now expanding our supplier programs, our programs with customers, partners so that our ecosystem also takes this as a priority just like how we are taking climate change as a priority.

    And the same thing goes with even the communities we live in so using data perhaps to create more transparency around the criminal justice reform that is much needed.  So Microsoft needs to start within our own house first and live our own culture but then reach out whether it’s to the historically black colleges to make sure that they have the STEM education, but really it’s more like when I look at the intern class – I was just looking at the demographics of the intern class at Microsoft, which by the way is all virtual.  I’m sure it’s the same at BlackRock.  It’s pretty stunning.  It’s one of the most diverse, gender, ethnic.  It’s sort of fantastic to see.  One of the things that I do worry is when they look up, when they look around them, is it inviting?  Is it giving them that, okay, this is a place where I can succeed?  And that’s, I think, the job ahead of us, and so that’s what we committed to doing.

    Becky Quick: And finally, I’d just like to ask you each, when you look at what’s happening, the crises that we’re all dealing with in the world with the pandemic and everything associated with that with the economic fallout, do you think it puts some of these issues on the back burner?  And I ask that because there was a study that took a look at the words climate change and how often they came up in conference calls.  In the first quarter, it was down 50% from where it was in the fourth quarter.  Is this a temporary thing, or is this a bigger hill to try – hurdle to try and jump over?  Larry?

    Larry Fink: We’ve had record flows into sustainable funds.  We’re seeing an acceleration of more and more people interested in sustainable funds.  As I said, COVID is an existential risk of health.  Climate change is an existential risk too.  It actually accelerates it, and let me just be clear.  The young people who are starting BlackRock this month, they’re doing it virtually.  These are the same young people who were teenagers during the great financial recession.  They were born or a few years old during 9/11.  They have a totally different experience than we did.  I personally had the most idyllic childhood.  I was happy and dumb.  It was perfect.  It’s not that way anymore unfortunately.  And these young people are demanding change for their future.  And their life is so different than our life, and I actually think when we’re – this is going to be an accelerant.  COVID is an accelerant for more focus on climate change.

    Becky Quick: Satya, a quick last word?

    Satya Nadella: I would first of all agree with that, which is in some sense the way we think about systemic issues is to really make sure that we have a systemic response.  So inside even at Microsoft when I look at what we are doing whether it’s climate change or racial inequity or dealing with healthcare coming out of this, all of these things will require us to re-imagine how to make the systems and the system or systems better.  So I think that we as a society can keep multiple priorities prioritized as opposed to trading one against the other.  But I do think that we need institutional strength all around.

    Becky Quick: Satya and Larry, I want to thank you both very much for your time today and for the conversation, and Zach, we’ll send it back over to you.

    Satya Nadella: Thank you so much.

    Becky Quick: Thank you guys.

    Larry Fink: Thank you, Satya.  Stay healthy and safe.

    Satya Nadella: Thank you, Larry.

    Larry Fink: Thanks Becky.  I think I will be on Squawk Box next Friday.

    Becky Quick: Fantastic.  We’ll see you both soon.

    Satya Nadella: See you.

    Larry Fink: Bye buys. Thanks everyone.

    Zach Buchwald: Thanks Becky and thank you Satya and Larry for opening our forum so thoughtfully. As Larry said, globalism is evolving, and its evolution will serve as the backdrop for a lot of the themes we plan to explore during this forum. You might have seen the thunderstorm in Larry’s background. That conversation and a few of the others were recorded over the past couple of days. As far as I know, that was the only time the weather was uncooperative. But now, I am pleased to be joined by Kate Moore, Head of Thematic Strategy and Global Allocation at BlackRock, who’s joining us from Jackson Hole, Wyoming.

    Kate has spent her career covering global equity markets, many of you will recognize her from her frequent appearances on CNBC. Welcome Kate.

    Kate Moore: Well thanks Zach, it’s great to be here enjoying this awesome conference today.

    Zach Buchwald:  Good to see you. Kate, we heard Larry and Satya cover a lot, but I’d like to take the themes that they discussed and bring it back to the investible opportunity set. So, first let me ask you, what do you think the evolution of globalization means for investors?

    Kate Moore: Yeah, so I want to underscore that phrase that Larry used, and you just repeated Zach, the evolution of globalism, instead of the reversal of globalism. We’ve been talking about this a lot, you know, does globalism and globalization change in this environment, or are we just in this process of evolution? And that’s really where I stand, particularly as it comes to corporates and to investing, evolution, not revolution, per se.

    So, we know that globalization has been a huge benefit for both consumers and for companies. You know, consumers have benefited from structurally lower prices, a wider array of goods and services available to them, and I have to say, as someone who studies equity markets and companies, it’s been a huge beneficiary for US corporates. And particularly, globalization has been the highest contributor to the increase in margins over the last 15 years in kind of two forms.

    The first is lower cost of goods sold when you’re able to source globally, and the second has been lower effective tax rates for especially multinational corporations who have operations in non-domestic settings. And so, you know, one of the questions we’ve been asking as analysts, as PMs, as investors at this point is, what are companies saying about globalization today? Like, are they changing their plans? And are they thinking about their supply chains differently than they were six months ago, or nine months ago, or twelve months ago.

    And what I have to say, it’s kind of hard to get a super clean reading on what companies are going to do. Mostly because they’ve been pulling guidance wholesale over the course of this pandemic, about their earnings, about their capital expenditure, and about their future expectations, and frankly, that kind of makes sense. But what we do know, is that the pandemic has accelerated a lot of trends that were in place beforehand, whether it’s around technology adoption, or in this case, rethinking supply chains.

    I just want to highlight one thing that I read recently from the American Chamber of Commerce in China, you know, the majority of companies they surveyed, and this was like a May, June survey, that are operating in China, said that they were not planning on fully relocating their supply chains, or pulling out of China. In fact, I think it’s much more likely that in this evolution of globalization, we think of a China plus strategy. I kind of like that phrase. It is keeping access to China’s logistics, infrastructure, to its workforce and to its skilled workers, and the end consumer, particularly in China, as that continues to grow, while also diversifying to other areas of the world.

    You know, it helps with their operations, it helps with business continuity, and it’s going to help them serve their end customers as these companies continue to grow. So, I don’t see any radical changes in plan yet. Companies are only going to make decisions that are economically feasible, that aren’t going to hurt them in the near or the medium term, and I think this process of evolution of globalization, or deglobalization sometimes, for investors, is going to be a major focus. We’ll think about it, what it means for margins, what it means for earnings, and also, I think what it means for new opportunities.

    Zach Buchwald: Okay, I mean, thanks for getting us there, because as an investor who is actually putting money to work real time, limited information coming from these companies that you invest in, but you also see accelerating trends, you have your eye on supply chains, supply chain changes, you have your eye on the macro themes between US China relations, how are you making decisions in terms of where to put money to work? What are the opportunities you’re seeing today?

    Kate Moore: Yeah, so Zach, there’s a whole bunch of opportunities and risks. You know, I think one of the things we need to remember is that over the last 10 years since the GFC and through the course of this recession and the pandemic, companies have become more conservative about their spending, investing plans. And they’ve been really thoughtful about managing to their margins, and as I mentioned, this globalization has been a huge contributor to an increase in net margins.

    So, we should expect these moves to be slow, and cautious, and thoughtful, but I see actually a few different interesting opportunities. As companies sort of rethink their supply chains, or develop several supply chains in parallel, I actually think it’s going to provide some interesting investment opportunities with new companies. There’s going to be, I think greater competition across different parts of the supply chain and services, and we’ll see more sort of domestic companies grow, operate, and develop, and I think that’s going to be great.

    The way I think about it from a US China perspective, is that it’s not pulling away from investments in China, it’s investing in US companies and the supply chains that may be here, as well as investing in China and the companies that are going to continue to develop on those supply chains. In terms of individual industries though, I see kind of three buckets. The first is around automation. You know, I keep on making this point that companies are only going to make really economic decisions, they care about their margins, they care about their earnings, they want to please us as shareholders.

    And, you know, if they are going to be reshoring to locations where manufacturing and production is more expensive, or labor costs are higher, we know that they’re going to focus on investing in automation and the systems that allow them to produce the same types of goods at reasonable prices they might have done in, say China, or in another emerging market with lower labor costs. So, I think that’s really important.

    The second industry I’m really watching is around logistics and infrastructure and transportation. I think that’s going to change meaningfully. It will cause some dislocations in some of the global shippers, for example, but greater opportunities in just in time shipping in domestic markets. And then third, and you know this is a huge secular trend, and a big place we’ve been invested in global allocation, is around technology. You know, the evolution of globalization is going to lead to more investment I believe, in software and systems and technology services that enable companies to really manage their multiple different supply chains and maintain their efficiency.

    Zach Buchwald: Okay, thank you. In the minute we have left, I just want to ask you quickly about sustainability. The changes in globalization, is it going to slow down the trend toward sustainability? Is it going to change the risk reward for sustainable investing?

    Kate Moore: Zach, this is easy to answer in a minute. The answer is absolutely not. In fact, the evolution of globalization is also about sustainability. It is partially driven by that. You know that here at BlackRock we define sustainable investing as combining traditional investments with ESG considerations, and I think that’s what we’re seeing a lot of companies do. And management teams are making decisions that are about sustainability, and I think are making them even more interesting and attractive to global investors like our team.

    Zach Buchwald: Okay. Thank you, Kate, very much for joining us. Thank you for framing the global conversation and telling us how you’re thinking about putting capital to work. We’re going to turn now to the topic that has changed the way we live in almost every possible way. COVID-19 is a virus unlike anything we’ve seen in our lifetime. The next conversation will focus on the progress being made to combat the virus and what the new future of healthcare is going to look like. I am pleased now to introduce BlackRock’s Chief Client Officer, my mentor, Mark McCombe, who is going to speak with three leaders in the healthcare space. Over to you Mark.

Key insights from this session


Globalism is not dead, but it is evolving. While globalism has benefitted billions of people around the world, it has left others behind and we need to adjust for the unintended consequences. Much of this work will fall on the shoulders of multinational corporations, which will increasingly need to address the issues that were created during the most recent phase of globalization, if they want to continue to have a license to operate in communities around the world.

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"If we don’t focus on the positive impacts of globalization, we are going to leave billions of people in society behind.”

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Larry Fink BlackRock CEO

Geopolitical tensions

While much of the focus in geopolitics is on U.S.- China tensions, there are other relationships — such as those between the U.S. and the EU and between China and India — that are significantly impacting the way corporations need to run their businesses. The world is being reshaped, and multinationals need to adjust. That means an increased focus on providing local employment opportunities, respecting different data sovereignty preferences and complying with a diverse set of jurisdictional rules. The bottom line for tech companies: The days of unfettered access to markets with little regulation are gone.

Corporate purpose

Society is frustrated with government and is looking for large corporations to play a bigger role. If corporations don’t have a strong purpose, they’re not going to get the best and brightest young people joining their firms. It’s a time for companies to be courageous, to focus on stakeholder capitalism and to put corporate purpose at the core of the business model. We believe those that do so will be the big winners in the future, while those that don’t are going to fall.

Sustainable investing

Given the challenges that Covid-19 presents to corporations, and to entire industries, there has been much speculation that as companies hunker down and focus on survival, they will be forced to scale back their efforts to combat climate change. But we don’t believe that this will be the case. We see parallels between the effects of the pandemic and the effects of climate change, and we view the pandemic as an accelerant that will likely increase focus on climate change and sustainability.

Attendee polling results

How has the retreat from globalism affected your investment strategy/positioning?

How has the retreat from globalism affected your investment strategy/positioning?
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Larry Fink
Chairman and Chief Executive Officer, BlackRock
Kate Moore
Head of Thematic Strategy, Global Allocation, BlackRock
Satya Nadella
Chief Executive Officer, Microsoft
Becky Quick
Co-Anchor of Squawk Box, CNBC
BlackRock Future Forum 2020
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BlackRock Future Forum 2020