In the case of BlackRock, the world’s biggest investment firm, its CEO Larry Fink in his annual letter to CEOs called for corporate social responsibility. If a business wants BlackRock to be interested, one of its goals has to be making a positive contribution to society. According to Fink, companies must benefit all of their stakeholders (shareholders, employees, customers, and the communities in which they operate).
How about gambling?
BlackRock has also invested in stocks of companies active in industries which are regarded by many as rather controversial. Fink says he doesn’t want to steer investment out of so-called sin industries. So although BlackRock probably will not divest itself of sin industries (weapons, tobacco, gambling), it can and will nudge companies towards behaving in a socially more responsible manner, according to an article on the website of the INSEAD business school.
BlackRock does not claim that companies should perceive maximising shareholder value as their only objective. Fink agrees that other stakeholders must be taken into account. A company should benefit everyone. So in order to achieve strong long-term sustainable returns, companies need also to create some social impact. If this approach is correct, social responsibility really can help to maximise value for shareholders, at least in the long term.
Bright future of CSR
Fink argues for a more activist stance among investment firms. The CSR community responded very positively to the letter. It was seen as an announcement of what is now required if BlackRock is to invest in the stocks of a particular company.
What exactly does the BlackRock investment company regard as social responsibility and what will be done in this area? What can the company do to fulfill the statement of its CEO? We will focus on this in the second part of the article.
-jk-