Those who wonder why some companies focus exclusively on the bottom line need only listen to an investor call. They’ll never hear a question about the company’s social responsibilities. It’s as if investors couldn’t care less.
Two days ago, we heard a shot in the dark. Larry Fink, the CEO of BlackRock, an investment firm controlling $6 trillion in assets, issued his annual CEO letter. In it, he tells CEOs of companies he’s invested in that they must be able to answer the following questions, so that his firm can understand their long-term strategy and their true value:
Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that that will help them achieve their goals?
When these questions are suggested by academics, privately-held companies, or politicians, nothing more than a rigorous debate ensues. But when the largest investor in the world speaks up, action must be taken.
Let’s hope this is a tipping point.
The Ethical Leader 