Do You Deserve The Dough?

The CEO of the world’s largest investment house says businesses must prove they’ve got more in mind than short-term plays.

 
 

For CEOs of a public company, an investor like BlackRock might be an ideal catch. It has deep pockets, a track record of taking a long-term view, and a stellar reputation. When its leaders talk, you listen.

And last week, Larry Fink, founder and CEO of BlackRock, had something to say. He sent a letter to CEOs of public companies telling them for BlackRock to invest, they must now show how “they make a positive contribution to society.”

This takes the idea of “doing well by doing good” to a whole new level, as Fink makes it clear companies that expect investment from the world’s largest money manager better be able to prove they do more than just make money.

Companies must now prove they perform a social good, that they resist the pressure to think in short-term returns to shareholders, that they not “sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth.” 

 

 

BlackRock hasn’t suddenly donned a white hat. No, the company with more than $5.7 trillion under management says investors and the society they live in are increasingly expecting the private sector to do more as the public sector does less, to address what Fink calls “a paradox of high returns and high anxiety” as secure employment and retirement become a distant dream for millions.

The letter is a good read. But it got me thinking …

Imagine if the mayor of your city, or the governor of your state, sent a letter to the major employers and companies in your region laying down a similar challenge. How would your credit union respond?

Answering tough questions requires honest assessment, introspection, and consultation. It’s an arduous process, but tough questions demand nothing less. Callahan’s Strategy Lab helps credit unions think differently about how to frame challenges and develop answers. Learn more today.

This is comparing apples and oranges to a degree, of course. Credit unions are chartered not-for-profits with members not shareholders, but the fundamental point is much the same. That point is that credit unions' long-term sustainability, much less growth, is based on how well they serve the needs of their community.

So, sure, your mission statement and the cooperative movement’s founding principles speak to social purpose. But, specifically, when responding to a letter like this, how would you respond? Are you satisfied with how you would respond today? Moreover, what might you aspire to include in your 2023 response?

We’d also love to hear from you. Comment below or share your ideas with me at jjeffreys@callahan.com.

What’s The Big Idea?

Asking tough questions will help the credit union movement flourish. Make Callahan’s Commentary on CreditUnions.com a regular stop for insight on thinking differently about tough questions and framing strategies for success.

Read More Commentary

 

Want more credit union strategies? Sign up for the CreditUnions.com free newsletter.

 

Jan. 23, 2018


Comments

 
 
 

No comments have been posted yet. Be the first one.