BlackRock CEO Larry Fink suggests that corporations should make a positive contribution to society apart from boosting the bottomline.

Olivia London

2018-01-09 08:33:00 Tue ET

BlackRock CEO Larry Fink emphasizes his key conviction that public corporations should make a positive contribution to society apart from boosting the bottomline. Society now demands that each public or private company serves a social purpose. To prosper over time, each company must not only deliver financial performance, but each company must also demonstrate how it makes a positive contribution to society. This kind reminder is a major watershed moment on Wall Street and raises questions about the unique nature of capitalism.

The Fink letter serves as a key lightning rod of stakeholder-value maximization for institutional investors such as BlackRock, Franklin Templeton, Vanguard, Charles Schwab, Fidelity, Allianz, State Street, PIMCO, PGIM, and so on. Key stakeholders include not only shareholders but also employees, customers, creditors, suppliers, regulators, and intellectual property assignees.

The government may fail to prepare for the future generations on socioeconomic issues such as retirement, infrastructure, automation, and education. As a result, society has to increasingly rely on the private sector in order to better respond to broader societal challenges. If a company cannot engage with the community with a crystal-clear sense of social purpose, the company ultimately loses its license to operate for better stakeholder value. For instance, some institutional investors and activist shareholders require Facebook, Apple, Microsoft, Google, and Amazon to consider the detrimental effects of mobile devices on children. Mutual funds and insurance firms such as AIG and Berkshire Hathaway can monitor whether energy companies such as ExxonMobil, BP, Phillips 66, and Saudi Aramco help mitigate environmental degradation. Also, key billionaires join the Giving Pledge campaign to curb global economic inequality. For instance, the Gates Foundation continues to help eradicate preventable diseases due to malaria, polio, Guinea worm, and smallpox in Africa and the Middle East. Nowadays, each company has to serve a social purpose in order to attract capital flows from asset management firms.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

What are the primary pros and cons of free trade or fair trade in the current Sino-American quagmire?

Jonah Whanau

2018-05-02 06:32:00 Wednesday ET

What are the primary pros and cons of free trade or fair trade in the current Sino-American quagmire?

What are the primary pros and cons of free trade or fair trade in the current Sino-American quagmire? Free trade means allowing goods and services to move a

+See More

The new antitrust enforcement paradigm

Joseph Corr

2023-10-14 10:32:00 Saturday ET

The new antitrust enforcement paradigm

Jonathan Baker frames the current debate over antitrust merger review and enforcement in America. Jonathan Baker (2019)   The antitrust paradi

+See More

Trump tariffs begin to bite U.S. corporate profits from Ford and Harley-Davidson to Caterpillar and Walmart etc.

James Campbell

2018-10-25 10:36:00 Thursday ET

Trump tariffs begin to bite U.S. corporate profits from Ford and Harley-Davidson to Caterpillar and Walmart etc.

Trump tariffs begin to bite U.S. corporate profits from Ford and Harley-Davidson to Caterpillar and Walmart etc. U.S. corporate profit growth remains high a

+See More

The finance ministers of Britain, Canada, France, Germany, Italy, and Japan team up against U.S. President Trump at the G7 forum.

Jonah Whanau

2018-06-02 09:35:00 Saturday ET

The finance ministers of Britain, Canada, France, Germany, Italy, and Japan team up against U.S. President Trump at the G7 forum.

The finance ministers of Britain, Canada, France, Germany, Italy, and Japan team up against U.S. President Donald Trump and Treasury Secretary Steven Mnuchi

+See More

MIT financial economist Simon Johnson rethinks capitalism with better key market incentives.

Daisy Harvey

2019-11-23 08:33:00 Saturday ET

MIT financial economist Simon Johnson rethinks capitalism with better key market incentives.

MIT financial economist Simon Johnson rethinks capitalism with better key market incentives. Johnson refers to the recent Business Roundtable CEO statement

+See More

Treasury Secretary Steven Mnuchin indicates that there is a good conceptual trade agreement between China and the U.S. in regard to intellectual property protection and enforcement.

James Campbell

2019-10-05 07:27:00 Saturday ET

Treasury Secretary Steven Mnuchin indicates that there is a good conceptual trade agreement between China and the U.S. in regard to intellectual property protection and enforcement.

Treasury Secretary Steven Mnuchin indicates that there is a good conceptual trade agreement between China and the U.S. in regard to intellectual property pr

+See More