Laurence Fink, founder and CEO of BlackRock, created a stir in January by sending a letter to the chief executives of BlackRock’s portfolio of companies. Mr. Fink told these leaders – many of whom run the world’s largest public companies – that if they wanted continued support from BlackRock, the largest investor firm worldwide, they need to make positive contributions to society as well as making profits.
In this letter, Mr. Fink noted that the society wants public and private companies to serve a social purpose. He states that many governments are failing to prepare for the future on a variety of issues, and so, society looks to the private sector to respond.
Founded in 1988, BlackRock has significant market influence because it is now among the three largest asset manager in the US with nearly $6 trillion in investments through 401(k) plans, exchange-traded funds, and mutual funds. With the changing relationship between society and businesses, Mr. Fink believes that companies will lose their license to operate from key stakeholders if the companies do not learn to engage with communities and establish a sense of purpose. And this isn’t a passing fad for BlackRock. It has added new staff to track how companies respond.
With his insistence that companies need to benefit society, Mr. Fink understands and supports the notion that companies have to be profitable. He believes social purpose and a company’s ability to make profits actually go hand-in-hand.