In January Larry Fink, the leader of BlackRock, one of the world’s richest investment/asset management firms, sounded a clarion call that made the 65-year-old CEO sounds so, well, millennial. Basically, this titan of industry in charge of $6.3 trillion in assets said his firm would seek to invest only in “good” companies. That is, companies whose capitalistic aggression was balanced by a notion of civic responsibility — care for the planet and its population, for starters. That’s what a who bunch of 20-somethings at Bernie Sanders rallies want. It’s a less common sentiment from capitalism’s most successful engineers. Coming from Fink, the letter — known in financial circles familiarly as “Larry’s Letter” — struck a new tone that was previously given mere lip service.
In his letter, entitled “A Sense of Purpose“, Fink wrote that “society is demanding that companies, both public and private, serve a social purpose.” And that BlackRock will invest only in companies that do. Fink isn’t being purely an altruist here, but rather an executive looking at the future with his finger on the pulse of society. Society, after all, is where the customers live — and Fink senses that a company without a positive social footprint will ultimately fail as the world gets more transparent and customers have greater choices. Fink thinks Blackrock will make more money investing in socially responsible companies — companies that make a “positive contribution to society.” Fink’s not laying down the new law just to get points from some imaginary ethics panel. He wants the companies he invests in to be on the right side of public opinion, which can have an enormous effect on P&L.