Since 2018, BlackRock CEO Larry Fink has been a household name for those of us in corporate responsibility. That was the year he boldly declared that his firm, the largest investor in the world managing more than $6 trillion, required companies receiving support from BlackRock to demonstrate that they contributed to society, in addition to making profits. With his outsized influence, Larry Fink led one of the most important and historical mind-shifts for the corporate sector when he wrote in his advisory letter to CEOs that year, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Every January since, CSR leaders wait with anticipation for Fink’s letter and feel the pressure of what I call “The Fink Effect” where public companies ask themselves “What matters most to our key stakeholders – customers, employees, investors, and policymakers?”, and “What commitments must we make, and accountabilities must we share, as we advance our purpose journey with stakeholders?” then incorporate these answers as essential components of their business model.
This January, Fink’s letter to CEO’s doubled down on his 2020 focus on climate change. I suspect many of us were a little surprised, perhaps expecting a letter that focused on the pandemic, economic devastation, and/or racial equity. Instead, Fink used the darkness of 2020 to make a key point: “the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.” Even Fink bought into the reasoning that the crises of 2020 would divert attention from climate change, but just the opposite took place, and the reallocation of capital to sustainable assets accelerated more rapidly than ever.
There is another point Fink makes in his letter that must remain top of mind for leaders in corporate citizenship. He directly weaves the issues of racial justice, economic inequality, and community engagement together with climate change with a clear and eloquent message that it is “misguided to draw such stark lines between…an E [environment] or an S [social] issue.” Instead, Fink’s admonition is that we gather, understand, and share information about how the E and the S interact with each other. No one inside a company can do that better than corporate citizenship professionals.
“Vulnerable communities and developing nations, many of them already exposed to the worst physical impacts of climate change, can least afford the economic shocks of a poorly implemented transition [to a net zero economy]. We must implement it in a way that delivers the urgent change that is needed without worsening this dual burden.”
I can’t stop thinking about how Fink’s words can tangibly impact the world’s ability to reach a goal of net zero greenhouse gas emissions by 2050. It is what most excites me about corporate responsibility – that our work is a central driver of the most necessary societal change.
Our field must continue to connect more deeply with both the E and S, understanding and speaking out through actions and words about the interdependence of these issues and the importance of their synergy. For CSR professionals, we can sometimes feel a distance from investors, financial assets, and securities, or even from carbon emissions. However, Fink reminds us once again that connecting business and society is critical for the success and sustainability of both.