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Article

18 Jan 2018

Author:
Judith Samuelson, Quartz at Work

Commentary: Larry Fink's letter to CEOs is about more than "social initiatives"

By any measure, Larry Fink’s letter to CEOs this year is a game changer... Fink in his letter excels at both clarity and simplicity: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society,” he writes in the opening paragraphs. New York Times writer Andrew Ross Sorkin, in turn, while writing about an early release of the letter that reaches CEOs on January 23rd, called BlackRock’s objective “new social initiatives.”

... More “social initiatives” will not fix our problems... Fink is not asking companies to engage in more philanthropy. We cannot meet the challenge of today with charity or workplace volunteerism. Instead, we require a solid new foundation for business operations and decision rules, and that requires change in both the C-suite and board rooms... Larry Fink... is asking business to get interested—to pay attention to the unintended costs of doing business and changing social norms, and to be bold in a time of low trust and a glaring disconnect between ‘value’ and values... Charity and ‘social initiatives’ are unsustainable. What business leaders need now is to re-knit some of the fraying fabric that holds us all together; to conduct their businesses as though they, themselves, are on the other end of the pipe, live on the other side of the wall, are the counter party in the contract. The country, and the world needs our business leaders to get this right. [refers to Amazon, VW, Wells Fargo, Uber]

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