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Article

15 Jan 2018

Author:
Andrew Ross Sorkin, New York Times

BlackRock’s message: contribute to society, or risk losing our support

On Tuesday, the chief executives of the world’s largest public companies will be receiving a letter from one of the most influential investors in the world... Laurence D. Fink, founder and chief executive of the investment firm BlackRock, is going to inform business leaders that their companies need to do more than make profits — they need to contribute to society as well if they want to receive the support of BlackRock... [which] manages more than $6 trillion in investments.... [According to Fink],... to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

...  “It will be a lightning rod for sure for major institutions investing other people’s money,” said Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management and an expert on corporate leadership. “It is huge for an institutional investor to take this position across its portfolio.‘‘... Mr. Fink says he is adding staff to help monitor how companies respond; only time will tell whether BlackRock truly uses his firm’s heft to influence new social initiatives... Part of Mr. Fink’s argument rests on the changing mood of the country regarding social responsibility. He contends that if a company doesn’t engage with the community and have a sense of purpose “it will ultimately lose the license to operate from key stakeholders.”

... Mr. Fink has in the past denounced “activist” shareholders as too focused on the short term. “If you asked me if activism harms job creation, the answer is yes,” he told me back in 2014. Now he is changing his stripes... In 2016, the firm withheld support from two directors as a protest against Exxon’s “non-engagement” policy, which barred independent board members from meeting with shareholders like Mr. Fink. Then, in 2017, BlackRock supported a shareholder proposal to enhance the company’s disclosures on climate... BlackRock voted in favor of activist-led proposals in 19 percent of proxy fights last year and that number is likely to rise. [refers to Apple & ExxonMobil]

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