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Sustainability Matters

BlackRock CEO Makes the Case for Sustainable Investing

Sustainability is BlackRock's new standard for investing.

BlackRock CEO Larry Fink’s annual letters to corporate CEOs over the past several years have been bellwethers of a shift in thinking about the purpose of the corporation--and of investing. Fink first started down this path in 2018, when he titled his letter “A Sense of Purpose,” arguing that successful companies exist to benefit all their stakeholders and make a positive contribution to society. Last year, he reiterated that idea, noting that companies face rising expectations from all their stakeholders for demonstrating positive purpose and public leadership.

This view--call it stakeholder capitalism--runs counter to the notion of shareholder primacy, the idea that the purpose of a public company is nothing more than maximizing shareholder value. That notion is on the wane, reflected in the growing sense that global capitalism just isn’t working well enough for most people. And over the long run, that means it won’t work for shareholders, either.