BlackRock’s Message: Contribute to Society, or Risk Losing Our Support

BlackRock’s Message: Contribute to Society, or Risk Losing Our Support

Laurence D. Fink and Santiago Calatrava at the Wilson Awards. By Wilson Center. [CC BY-SA 3.0 or GFDL], via Wikimedia Commons.

Investment firm Blackrock put companies on notice Tuesday that they must have a social purpose in order to receive funds from the organization. In a letter to business leaders, Blackrock founder and CEO Laurence D. Fink informed CEOs worldwide that simply earning profits is no longer enough—companies must demonstrate social responsibility to maintain license to operate.

The announcement could signal a watershed moment for the business community. Blackrock manages more than $6 trillion in investments through 401(k) plans, exchange-traded funds, and mutual funds, making it the largest investor in the world. The firm’s ultimatum may compel organizations to expand their business goals.

“Many governments [are] failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining,” Fink wrote in a draft of the letter that was shared with the New York Times. “As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges.”

The tax cuts recently passed by Congress may also embolden activist investors to demand answers on the use of increased cash flows. “Companies who have not already developed and explained their plans will find it difficult to defend against these campaigns,” Fink says.

Read the full article at nytimes.com.



2019-02-13T07:23:08+00:00