On Monday morning, the 8th of January, Apple’s board members had probably just recovered their iPhones from their kids, who had been using them all weekend for gaming, when they saw an open letter posted online by two of the company’s major investors. The shareholders called on Apple to take action against smartphone addiction amongst children.
“To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society,” Larry Fink, Chairman and CEO of BlackRock, writes in the open letter he published a week later, on the 16th of January. BlackRock manages more than $6 trillion in investments, which makes it the biggest investor in the world. In the letter, he urges the corporate world to become an active, engaged agent for change in society. If not, it might lose BlackRock’s financial backing.
The week after, on the 22nd of January, Bloomberg announced that 104 companies have joined the 2018 Bloomberg Gender-Equality Index (GEI). “As investors continue to seek more information on companies’ approaches to environmental, social and governance (ESG) factors, the 2018 Bloomberg Gender-Equality Index allows investors to compare companies’ commitments to gender equality across industries,” Kiersten Barnet, Deputy Chief of Staff to the Chairman at Bloomberg, said in a statement.
Three days ago, on the 25th of January, the New York Times published an article on how the World Bank’s president, Jim Yong Kim, is aiming to revitalize the institution by seeking cooperation with Wall Street investors on projects to protect coastal shores in West Africa, back geothermal energy in Indonesia and support the expansion of electric cars in India.
These are just four of the most recent examples of how the Wall Street investor community is beginning to take on a role that goes beyond driving short-term financial results, urging companies to live up to what society expects of them. Investors do so not because they have suddenly become philanthropists, but because they are increasingly aware that their return on investment increases when companies positively contribute to society.
Whether we like it or not, money is the oxygen for the business world and investors will have a major influence on what sectors and companies will flourish and those that will have a hard time surviving. If investors continue to mandate and/or contribute to change, this will be a powerful accelerator for businesses to accept the fact that sustainable business growth and societal responsibility are inseparable.
We need more Paul Polmans, the Unilever CEO who has become the poster child for purpose in the corporate world. We need more Emmanuel Fabers, the CEO of Danone and a fierce defender of the concept that food is a human right, not a commodity, who in 2017 announced plans to design a roadmap for Danone to obtain B Corp certification, showing his commitment to live up to a clearly defined set of business principles. We need companies to undergo rapid and transformative change from within in order to take on a role of responsibility for the communities in which they operate.
But let’s also celebrate investors driving change from the outside. Let’s help Wall Street find its purpose in investing in business with purpose. The brokers would for sure feel better at night knowing that they make money whilst encouraging their investments to drive positive societal change. But more importantly, the world would be grateful.
Let’s hope the examples of the first weeks of January 2018 are a sign of what is to come for the rest of the year.
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Published Feb 1, 2018 8pm EST / 5pm PST / 1am GMT / 2am CET