‘Do good for society, CEOs’
More than 1000 global bosses have received a letter from one of the world’s most influential money managers with a pointed message: Simply posting good financial returns is no longer enough. You must have a positive impact on society, too.
In his annual letter to chief executives sent this week, Laurence Fink, the chairman and chief executive of BlackRock, which manages nearly US$6.3 trillion (NZ$8.6 trillion) in investments, put CEOs on high alert that they would be expected to answer questions about their long-term strategy.
They would be asked how they planned to use savings from the United States tax reform law, what role they played in their communities and whether they were creating a diverse workforce that was being retrained for a more automated future.
‘‘Society is demanding that companies, both public and private, serve a social purpose,’’ Fink wrote in his letter, which was first reported 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.’’
In this year’s letter, Fink said he would double the size of BlackRock’s team that engages with companies to try to get them to do more on such issues.
‘‘We are seeing a paradox of high returns and high anxiety,’’ Fink wrote, expressing concern about income inequality, infrastructure and automation.
‘‘Since the financial crisis, those with capital have reaped enormous benefits. At the same time, many individuals across the world are facing a combination of low rates, low wage growth and inadequate retirement systems.’’
He noted the growing expectation that the private sector play a role in resolving concerns, writing that ‘‘we also see many governments failing to prepare for the future’’.
Nell Minow, vice-chair of the ValueEdge Advisors, said that as the government increasingly rolled back its involvement in issues like climate change, there was a greater expectation that private sectors should pick up the slack.
The impact of the letter would depend, of course, on how much ‘‘muscle’’ BlackRock put behind the letter’s demands, he said.