When a man overseeing $5.7 trillion speaks, the global business community tends to listen. So when BlackRock founder Larry Fink posted a letter to CEOs demanding greater attention to social impact, it sent shockwaves through corporations around the globe.
In the letter, titled “A Sense of Purpose,” Fink wrote,
We … see many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining. As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. … Society is demanding that companies, both public and private, serve a social purpose. … Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.
Fink’s letter dropped just days before the 2018 World Economic Forum, an annual gathering of the global financial elite in Davos, Switzerland. I was attending the forum and watched as CEOs anxiously discussed the stern warning from a man whose firm controlled substantial ownership stakes in their companies. Many publicly professed sympathy for Fink’s message but privately declared his emphasis on broader social welfare to be anathema to the logic of private enterprise.
Looked at narrowly enough, they’re right: publicly traded companies are in it to win it, bound by fiduciary duties to maximize profits. But in the age of AI, this cold logic of dollars and cents simply can’t hold. Blindly pursuing profits without any thought to social impact won’t just be morally dubious; it will be downright dangerous.