BlackRock CEO Calls For Social Justice In Corporate Culture 
January 17th, 2018 by Steve Hanley
Laurence D. Fink
Laurence D. Fink may not be a household name, but he is a very influential person. When Mr. Fink speaks, others listen. Why? Because as the founder and CEO of BlackRock, he controls more than $6 trillion in assets. That’s the kind of clout that gets a person noticed. On January 16, the chief executives of most of the major business corporations in the world received a letter from Laurence Fink telling them they have to develop a social conscience if they wish BlackRock to continue investing in their business.
A Letter, But So Much More“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate,” Fink writes.
What? Has the ghost of Ayn Rand finally been interred? Has Milton Friedman’s bust been removed from the Economists’ Hall of Fame? Has the entire Chicago School of Economics philosophy that the only duty of a business corporation is to make money for its shareholders been tossed into the dustbin of history?
Not quite, but close. BlackRock wields enormous power in corporate boardrooms. In many cases, it gets to decide who sits on those boards and who does not. In recent years, it has taken a more activist role, which includes siding with ExxonMobil shareholders who demanded the company be more open about its exposure to climate change related risks. That initiative would have failed without BlackRock’s support.
What are the implications of Fink’s letter? Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management, tells the New York Times he has seen “nothing like it’’ before. “It will be a lightning rod for sure for major institutions investing other people’s money,” he says. “It is huge for an institutional investor to take this position across its portfolio.‘‘
The Social License ConceptThe letter suggests that a business that does not serve the community may lose what is known as its “social license to operate.” According to Investopedia, “The Social License to Operate, or simply social license, refers to ongoing acceptance of a company or industry’s standard business practices and operating procedures by its employees, stakeholders and the general public. The concept of social license is closely related with the concept of sustainability and the triple bottom line.
“Social license to operate is created and maintained slowly over time as the actions of a company build trust with the community it operates in and other stakeholders. A company must be seen operating responsibly, taking care of its employees and the environment, and being a good corporate citizen. When problems do occur, the company must act quickly to resolve the issues or the social license to operate is put in danger.”
In his letter, Fink comes close to taking a swipe at the current administration, saying “many governments [are] failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining.” He added, “As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges.” If a company fails to respond, however, “it will ultimately lose the license to operate from key stakeholders.”
A Contrary OpinionNot everyone is thrilled with Laurence Fink’s newfound social conscience. CleanTechnica writer Tina Casey pointed me toward a story on CNBC in which another billionaire, Sam Zell, described Fink and others who think like him as
“extraordinarily hypocritical.” Zell heads one of the largest real estate investment firms in America and is CEO of five corporations listed on the New York Stock Exchange. He describes himself as a social liberal but a fiscal conservative and he maintains the bottom line is the raison d’être of business and makes no apology for his point of view.
“They talk about the fact that they’re in effect going to do exactly what the market does,” says Zell, “and then they put up public policy statements that suggest that they’re going to advocate the market doing things other than what happens every day. Either they’re a passive fund that follows the market or they’re a leader that’s setting the tone. I didn’t know Larry Fink had been made God.”
The Milton Friedman FallacyZell’s remarks set up the struggle between capitalism and social responsibility perfectly. Back in 1970, Milton Friedman told the New York Times, “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” Ebenezer Scrooge couldn’t have put it any better and his words mesh well with the poisonous social ideas being promoted by the Koch brothers and their ilk.
And yet, a curious thing happened between 1970 and now. In 2010, in the landmark Citizens United case, the US Supreme Court blithely asserted that corporations have the right of free speech because they are a “person” within the purview of the Constitution. That “fact” was presumed by the court to be one of those self-evident truths that any person of ordinary intelligence would agree with. The Citizens United decision puts an odd twist on Friedman’s pronouncement. If a corporation is just another “person,” does it not follow that it owes the same duty that real people have to not pollute the lands, rivers, skies, lakes, and oceans?
Greed Is Maybe Not So Good After AllAnd that leads us back to the fascinating discussion about
untaxed negative externalties we have been having here on CleanTechnica recently. It is one thing to say a corporation has only one obligation — to make money for its investors.
It is quite something else to say a corporation should be allowed to pass off some of the costs of doing business so others have to pay them.For instance, Walmart pays its workers so poorly that many of them qualify for food stamps and other government assistance programs. That means the taxpayers are subsidizing Walmart’s business. Why should that be the case? Why should “Always Low Prices” translate into a license to tap the public fisc for the general benefit of Walmart’s owners?
Milton Friedman’s “greed is good” philosophy may be the distilled essence of capitalism, but it only works if businesses are required to bear all of the costs they impose on society, not just some. Otherwise, the accounting just doesn’t add up, which is the idea behind the triple bottom line concept. Laurence Fink is pointing out that the corporate community is cooking the books and he is calling them on it. What impact his letter will have on corporate policies and procedures won’t be known for some time, but it is, if nothing else, a good first step and long overdue.
https://cleantechnica.com/2018/01/17/blackrock-ceo-calls-social-justice-corporate-culture/Agelbert COMMENT:
Milton Friedman’s “greed is good” philosophy may be the distilled essence of capitalism, but it only works if businesses are required to bear all of the costs they impose on society, not just some.
Exactly RIGHT!
Unrestrained Capitalism is the goal of every Capitalist. Laurence D. Fink and his elite friends aren't turning over a new "We need to be responsible to the community" leaf. What they are doing is attempting to insulate the oligarchs from the cost of mitigating all the environmental damage they have profited from by adopting a "responsibility" PR meme. They know what Catastrophic Climate Change will do to society and they do NOT want to pay their fair share of the mitigation efforts.
It's like this:Theresa Morris wrote an excellent Essay that fleshes out what the leaders of society must do if they are serious about acting in a socially responsible manner. I added graphics to underline the importance of her essay and some comments at the end, but the work is hers and it deserves to be broadcast far and wide.
I am posting here two of the graphics I included in my comments on Theresa's Essay in order to explain to readers how TPTB,
who are well aware of the dangers inherent in climate change (though they won't admit it), plan to make all the rest of us pay for what those actually DOING over 90% (
about ONE percent of the world population) of the damage are liable for (i.e. environmental damage through government policies subsidizing polluters actively and passively through mendacious happy talk propaganda born of corporate corruption).
IOW, those responsible for the damage plan to spread the cost to further enrich the oligarchic polluters that got us into this mess in the first place. The operative phrase is "Fragmentation of Agency".
The "Agency" definition here is the responsibility for harm and the consequent responsibility to pay for mitigating said harm.
"Fragmentation" refers to what percentage of all those with Agency in doing the harm are responsible to pay to mitigate and eventually repair said harm.
Since, according to the U.N., the richest 20% of the world's population uses 80% of the resources, the 'Fragmentation of Agency' pie chart for the damage done to the biosphere should look like this:
The fossil fuel industry, and almost half of the world’s 100 largest corporations, want that 'Fragmentation of Agency' pie chart to look like is as follows:
The above graphic is how TPTB polluter enablers will try to pass most of the buck away from themselves and onto we-the-people.We either adopt the common sense ethical recommendations of visionaries like Theresa Morris, or we are toast.
What it Means to be Responsible - Reflections on Our Responsibility for the Future by Theresa Morris, State University of New York at New Paltz 
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October 10, 2014, 02:00:44 AM