Written by FASPE Business Fellows Brian Hathaway and Courtney Kaplan
In a world in which democratically elected governments seem increasingly unable to enact policy while large companies exercise outsized influence, what is the appropriate role of a corporation? Is it solely to maximize profits? The world’s two largest asset management companies made headlines this month: Vanguard Group for the passing of its founder John C. Bogle, who popularized the index fund, and BlackRock Inc. for Larry Fink’s annual letter to CEOs. Institutional investors, such as Vanguard and BlackRock, now own approximately two-thirds of U.S. equities and thus can exert broad influence over managerial practices. While Fink’s motivations and effectiveness may be debated, institutional investors will continue to shape discussions of corporate purpose. This op-ed examines Fink’s call to view social purpose as a company’s “fundamental reason for being” and as inextricably linked with profitability.
Read the original article on Bloomberg Opinion.