By Simon Jessop
LONDON (Reuters) - The world is entering a "new economic regime" that will see company performance driven by how boards manage mega-trends including the transition to a low-carbon economy and AI, asset manager BlackRock (NYSE:BLK) said on Thursday.
The world's biggest asset manager said figuring out how companies plan to build resilience into their strategy as a result of the changing macroeconomic and geopolitical backdrop would be a focus of talks with them ahead of annual shareholder meetings.
Others, unchanged from last year, would include board quality and effectiveness, strategy and purpose, incentives, climate and natural capital, and the impacts a company has on people.
Slower growth, higher inflation, higher interest rates, and production constraints had all impacted company performance, leading many companies to reassess how they would cope in a world of structurally lower growth and higher capital costs, BlackRock said.
"They are considering how to adapt to a reshaping financial landscape, as banks face tighter regulation and greater competition for customer deposits and the supply of credit from banks tightens," it said in the report entitled "Financial resilience in a new economic regime".
"CEOs and CFOs are thinking about how to unlock operational efficiency, optimize their balance sheets, and enhance capital allocation."
Four structural shifts would shape the new economic regime, it added: digital disruption and artificial intelligence (AI); geopolitical fragmentation and economic competition; the low-carbon transition; and demographic divergence.
"Against the backdrop of these shifts, we expect to see a wider range of company performance – with companies that can harness these forces and capitalize on them outperforming, while those that struggle to adapt could underperform," it said.
"That wider range of outcomes – and the uncertainty that comes with it – is reflected in an unusually wide range of analyst estimates of future company earnings."