Larry Fink, chairman and chief executive of BlackRock, has stated his commitment to the role of the global investment giant as a steward for the companies in which it invests in his annual letter to chief executives.

As a major index fund investor Fink believes that BlackRock can increase the value of these investments through engagement with companies encouraging them to make improvements on environmental, social and governance issues and to look more broadly at the role of their firms within in society.

Fink wrote: "Globally, investors’ increasing use of index funds is driving a transformation in BlackRock’s fiduciary responsibility and the wider landscape of corporate governance."

He wrote that Michelle Edkins, global head of investment stewardship, had helped transform BlackRock's practice from one predominantly focused on proxy voting towards an approach based on engagement with companies since her appointment in 2011.

To reflect the growing importance of investment stewardship Fink announced that Barbara Novick, vice chairman and a co-founder of BlackRock, would now oversee the firm’s efforts with Edkins still taking the lead day-to-day. BlackRock also intends to double the size of its investment stewardship team over the next three years.

Fink reiterated some of his themes from 2016 and 2017 that companies needed to concentrate on creating long-term value. He said thinking about the long-term also needed to be the focus for investors so that their responsibility goes beyond casting proxy votes at annual meetings.

He said:  "If engagement is to be meaningful and productive – if we collectively are going to focus on benefiting shareholders instead of wasting time and money in proxy fights – then engagement needs to be a year-round conversation about improving long-term value."

BlackRock, Fink suggested, needed to engage with directors who can spell out the long-term strategy of their company which must articulate a path to achieving financial performance. To sustain that performance, however, directors also needed to understand the societal impact of their business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affected their potential for growth, Fink said.

Last year BlackRock engaged with activist institutional investors who had been calling for it to be more outspoken in its communications with companies about climate change and spelt out for the first time how it would engage with firms on this issue. Recent research also showed that BlackRock supported shareholder-led climate change resolutions in the US for the first time last year.