What is the most purposeful way to spend USD 1.7 trillion?
By Helle Bank Jorgensen, CEO, B. Accountability and member of the A4S Expert Panel
Larry Fink, the CEO of the world’s largest asset management firm, BlackRock, is looking for a Sense of Purpose. BlackRock manages USD 1.7 trillion in Active Funds and has been calling for a purposeful approach to business practices for a while now. In his latest letter to CEOs, Larry Fink writes, “To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.” He adds, “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders.” BlackRock is the latest of a growing list of mainstream investors who are backing initiatives such as Principles for Responsible Investment (PRI) and the Task Force on Climate-related Financial Disclosures (TCFD).
Response from Board of Directors
The letter that Mr. Fink sent to CEOs had an impact. It was read by Executive Leadership teams as well as the Board of Directors of the world’s largest companies. As a Board facilitator, I know that the letter has resulted in internal discussions about societal purpose – some places in a positive tone, other places with a thought that Mr. Fink has gone soft. However, all analysis shows that Mr. Fink and other investors are ‘smelling better returns on their investments’.
We live in a world where disruptions are becoming the norm and resilience is the strongest shield and weapon to survive and thrive as a business. Only the companies and boards that are aligned and prepared will have the ability to continue to operate successfully. So naturally, many companies are now working to get the BlackRocks of the world the information that will show that they can achieve their “full potential” to use Mr. Fink's own words.
The answer is worth USD 12 trillion
The time could not be better. Never before have we seen such an alignment between what the world needs, what investors want and what global businesses can provide.
What many companies are looking for is a framework to align the societal benefit they can provide with what the world needs. The answer already exists and could open economic opportunities worth up to US$12 trillion; it is a framework highlighting the world's biggest pain points or goals and it is called the Sustainable Development Goals (SDGs).
I use the SDGs framework when I facilitate discussions with Boards about long term opportunities, risks and how to link the business strategy to societal purpose. I am not alone. Powerful CEOs who are behind the Business and Sustainable Development Commission report have predicted that companies who invest related to the Sustainable Development Goals (SDGs) could get access to a US$12 trillion market by 2030.
One of those CEOs is Paul Polman, the CEO of Unilever, who has shown that purpose and profit go hand in hand. Mr. Polman has reported that Unilever brands with a purpose such as Dove and Ben & Jerry are growing at twice the speed of others in the portfolio.
It is a perfect storm. Now it is up to companies if they want to take advantage and deliver financial performance while also making a positive contribution to society.