What Would You Say…You Do Here?

Earlier this month, the investment behemoth (which manages more than $6 trillion in assets) sent a letter to companies they’re invested in saying that, if they want to continue to receive the support of BlackRock, they need to prove that their business positively contributes to society.

Positively contributes to society? Huh? This is Wall Street. This is capitalism. This is Gordon Gecko. Greed is good, right? According to Laurence D. Fink, founder and CEO of BlackRock, greed is sooo 2017.

“Society increasingly is turning to the private sector and asking that companies respond to broader societal challenges,” he wrote in the letter, now posted on the BlackRock site. “Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

The letter goes on to talk about issues like slow wage growth, rising automation and even climate change, associating each as broad structural trends impacted by the decisions of big companies and their boards. Wow. While it’s fair to assume this dramatic language was the result of Mr. Fink being visited by three ghosts over the holidays, he’s actually been touting the need for long-term vision on Wall Street for years. But this is the first time someone in his position has threatened (for lack of a better word) to pull support if companies don’t adhere to some greater good.

So, (to use annoying advertising jargon) – let’s unpack all of this.

What can companies do to address the “social good” they provide?

We live in an era when a consumer wants the brands that sell them yogurt and leggings to also have a viewpoint on social justice. “Sure, I like your coffee – but where do you stand on gender identity?” In response, companies have waded into an ocean of online activism and sometimes gotten in way over their heads. (see: Pepsi solving racism with Kendall Jenner) So it’s important to keep perspective, and try to:

• Be Specific with your Mission – Go deep not wide; specificity helps you make more impact and avoid dilution.
• Think Small – Your company should contribute positively to social good; it doesn’t have to cure world hunger on its own. Consider some small measure of good your products/services provide, and then grow those.
• Collaborate – We are all better together. Forming partnerships and coalitions with like-minded companies is the key to the private sector truly impacting big social change.

Are we talking about real change, or just marketing optics?

That’s the unique thing about the BlackRock letter – Mr. Fink wasn’t just talking about CSR (Corporate Social Responsibility), but something more substantive and foundational. Instead of, “What good do you do with your profits?” (i.e. how companies traditionally view CSR), we are now talking about, “Why do you exist?” It’s an important subtlety and one that will create some restless nights for more than few CMOs out there. Because if the answer to that existence is “to make money” – that ain’t good enough anymore.

Get to the point. What is the takeaway here?

Easy! Geez. Does this mean the end of capitalism? Sorry, hippies. The BlackRock move (while noble) won’t really change the focus on profits for most companies. (BlackRock pocketed more than $3.3 billion in revenue last quarter; so they can afford moral superiority whereas most of us need to, ya know, afford rent.) So here’s the thing to remember about the BlackRock letter – for your company, it’s not an answer, it’s a question. And it’s the most important one you can ask yourself, your leadership and your employees – what do we stand for? Because for consumers nowadays, it’s not all about the goods you provide, it’s also about the good you provide.

What do you think of the BlackRock letter? Will it change things, or is it a marketing ploy? How does your company positively contribute to society?