NEW YORK: BlackRock, the asset-management company, has provided a high-profile endorsement for organizations that pursue a clear social purpose by suggesting this type of approach, rightly applied, is critical for long-term growth.

Brian Deese, managing director/global head of sustainable investing at BlackRock, discussed this subject at the 2018 Techonomy NYC conference.

And he referenced the latest annual letter from Larry Fink, BlackRock’s CEO, which highlighted the fact society is now “demanding” that corporations fulfill a social purpose – a situation that should give every enterprise pause for thought.

Goodwill investing, Deese reported, traditionally fell under the rubric of “environmental, social and governance” criteria that allowed investors who were concerned about these matters to track company performance beyond the bottom line.

Now, however, BlackRock – which manages more than $6 trillion in assets – believes social purpose is no longer simply a nice-to-have item on the agenda, but instead constitutes a fundamental element of future-proofing a business.

“These issues that are traditionally thought of as non-financial – and they traditionally get bucketed into the world of ESG, or environmental, social, and governance issues – we believe do actually have material financial impact over the long term,” Deese said. (For more, read WARC’s in-depth report: BlackRock turns brand purpose into a $6-trillion question.)

“For companies to succeed over the long term, they need to be able to define, and then defend, their social purpose in the communities that they operate in, with the customers that they engage with, with their own employees.”

Equally, social polarization and the failure of political institutions to deliver meaningful change have led to a heightened focus on companies as providers of solutions to major issues like climate change or social discrimination.

Within that, digital platforms have enabled all stakeholders – be it consumers, employees or investors – to more easily gather information and voice their opinions in response.

“Some of it is about the increased empowerment and speed with which individuals – those consumers in those communities – can actually engage directly in these issues,” Deese said.

“So, the speed at which, if a company loses its sense of social purpose, that can actually come and affect their operations is increasing as the world becomes smaller [and] as technology enables more interaction … I think those things all came together to create this increased focus.”

Sourced from WARC