On Tuesday, leaders of the world's largest public companies will be receiving a letter from one of the most influential investors in the world. And what it says is likely to cause a firestorm in the corner offices of companies everywhere and a debate over social responsibility that stretches from Wall Street to Washington.
Laurence D. Fink, founder and chief executive of the investment firm BlackRock (NYSE: BLK) is going to inform business leaders that their companies need to do more than make profits — they need to contribute to society as well if they want to receive the support of BlackRock.
Fink isn’t making idle threats: he has the clout to make this kind of demand: His firm 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, and he has an outsize influence on whether directors are voted on and off boards.
"Society is demanding that companies, both public and private, serve a social purpose," Fink wrote in a note published Tuesday by the New York Times "To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society."
Part of Fink's argument rests on the changing mood of the country regarding social responsibility. He contends that if a company doesn't engage with the community and have a sense of purpose "it will ultimately lose the license to operate from key stakeholders."
As for BlackRock, its shares galloped $14.50, or 2.6%, early Tuesday to $570.03
