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
The Economist delves into the modern perils of tech titans such as Apple, Amazon, Facebook, and Google.
Jacob Miramar

2018-01-12 07:37:00 Friday ET

The Economist delves into the modern perils of tech titans such as Apple, Amazon, Facebook, and Google.

The Economist delves into the modern perils of tech titans such as Apple, Amazon, Facebook, and Google. These key tech titans often receive plaudits for mak

+See More
The Trump administration postpones increasing 25% to 30% tariffs on $250 billion Chinese imports after China extends an olive branch to de-escalate Sino-American tariff tension.
Jacob Miramar

2019-10-01 11:33:00 Tuesday ET

The Trump administration postpones increasing 25% to 30% tariffs on $250 billion Chinese imports after China extends an olive branch to de-escalate Sino-American tariff tension.

The Trump administration postpones increasing 25% to 30% tariffs on $250 billion Chinese imports after China extends an olive branch to de-escalate Sino-Ame

+See More
Federal Reserve's QE exit strategy makes sense ahead of Fed Chair Janet Yellen's stepdown in 2018.
Chanel Holden

2017-03-27 06:33:00 Monday ET

Federal Reserve's QE exit strategy makes sense ahead of Fed Chair Janet Yellen's stepdown in 2018.

Goldman Sachs chief economist Jan Hatzius says the Federal Reserve's QE exit strategy makes sense ahead of Fed Chair Janet Yellen's stepdown in 2018

+See More
Japanese prime minister Shinzo Abe outlines the main economic priorities for the G20 summit in Osaka, Japan.
Laura Hermes

2019-07-13 07:17:00 Saturday ET

Japanese prime minister Shinzo Abe outlines the main economic priorities for the G20 summit in Osaka, Japan.

Japanese prime minister Shinzo Abe outlines the main economic priorities for the G20 summit in Osaka, Japan. First, Asian countries need to forge the key Re

+See More
HPE CEO Meg Whitman decides to step down after her 6-year stint at the technology giant.
Charlene Vos

2017-11-07 09:38:00 Tuesday ET

HPE CEO Meg Whitman decides to step down after her 6-year stint at the technology giant.

HPE CEO Meg Whitman has run both eBay and Hewlett Packard within Fortune 500 and now has decided to step down after her 6-year stint at the technology giant

+See More
Trump imposes tariffs on steel and aluminum in a trade war with some exemptions for Canada and Mexico.
Olivia London

2018-03-01 07:35:00 Thursday ET

Trump imposes tariffs on steel and aluminum in a trade war with some exemptions for Canada and Mexico.

Trump imposes high tariffs on steel (25%) and aluminum (10%) in a new trade war with subsequent exemptions for Canada and Mexico. The Trump administration&#

+See More