Laurence Fink, CEO of Blackrock with $6.3 trillion of assets under management sent a letter to one thousand CEOs outlining that in the future they will be evaluating companies on their societal impact not just profits. Blackrock manages major index funds which require that they invest in firms included in the index even when they don’t like the direction management is taking the company or take actions that are detrimental to their employees or community. Fink tells executives that a new age has arrived where shareholders and company management need to be more actively engaged. Plus, companies need to take the long term view related to rising automation, slow wage growth and climate change and explain their plans to shareholders.
We applaud Fink’s focus on social responsibility by corporations. As he notes governments maybe way behind in the seeing the needs of society and solving those problems. Corporations can even add value, as Deloitte observes in five ways: creating new market opportunities, taking regulatory relationships from reactive to proactive, retaining top talent, enhancing brand value, and building sustainable supply chains. Now, let’s make this a priority on Wall Street. Fink in an interview on NPR’s Marketplace today, clarifying that Blackrock was not Wall Street. We have a ways to go with Wall Street expectations for quarterly results – we can hope that Wall Street was listening to a major investor like Blackrock.