BlackRock's Larry Fink Tells CEOs to Pursue Purpose Along With Profits
(Bloomberg) -- BlackRock Inc. Chief Executive Officer Larry Fink told global chief executives that they need to take a larger role in social and political issues rather than just focusing on profit.
As governments fail to offer solutions to pressing social problems, people are looking to public and private companies to step in and offer fixes, Fink said in his annual letter to CEOs.
“Stakeholders are pushing companies to wade into sensitive social and political issues -- especially as they see governments failing to do so effectively,” Fink, who oversees almost $6 trillion at BlackRock, wrote in the letter Thursday.
Fink got a mixed reception from business leaders a year ago when he sent a letter that pressed CEOs to make a more positive contribution to society. This year’s message is a continued explanation of his evolving view of the role of business.
“As a CEO myself, I feel firsthand the pressures companies face in today’s polarized environment and the challenges of effectively navigating them,” Fink said. He also pushed back against the notion, long espoused by the economist Milton Friedman, that a company’s only social responsibility is its profits.
Fink also mentioned that millennial workers are demanding new things from the companies where they are employees, customers or shareholders. They make up more than one-third of the workforce, and increasingly focus on how companies affect society.
“Profits are in no way inconsistent with purpose,” Fink wrote, adding: “Purpose is not the sole pursuit of profits but the animating force for achieving them.”
The New York Times earlier reported on Fink’s letter.
Jeff Sonnenfeld, an expert on leadership who teaches at the Yale School of Management, highlighted that the letter calls for more than just social responsibility from companies.
“Some argue that CEOs aren’t selected to be a political voice. I think that’s wrong.” he said. “It’s part of the job.’’
Fink also returned to a theme he often focuses on: the need for companies to better prepare their employees for retirement. This is particularly important in the U.S., he said, because the shift to defined contribution plans is “leaving too many workers unprepared” for retirement.
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