Last month, Larry Fink, CEO of BlackRock, the world’s largest asset manager shared his annual letter to CEOs.
His remarks triggered excitement, backlash from the New York Post and the Wall Street Journal, and a slew of headlines. His message? Companies need to put purpose into everything they do to win customers, shareholders, and employees. Fink also argues that sustainability isn’t about environmentalism, it’s about capitalism Love him or hate him, he's taking stakeholder capitalism to the mainstream, writes Forbes.
“I beat the sh#t out of myself every day.”
Just last week, Bernard Looney, CEO of BP spoke with the Financial Times about how he’s addressing stakeholder capitalism as a fossil fuel giant shifting the company to balancing profit and environment. The interview included an unforgettable admission: “I beat the sh#t out of myself every day.” Love him or hate him, the job isn't easy. (Bernard admits too that his life is consumed with making the BP ambition possible.)
What both made clear: The move to decarbonization is necessary not just for the environment, but for any business to succeed long term. And so is a real commitment to building a diverse and inclusive culture. Diversity, equity, and inclusion are key to enabling sustainability or the "s" in ESG.
It’s a conversation ALLY Energy has provoked for years -- and one we’ve built a community of critics and allies around. We see the shift. We know the workforce is shaping capitalism. The Great Resignation is just starting and we think it's an opportunity for the workforce and companies.
Fink: It’s not ‘woke’
In his letter, Fink made this clear.
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.”
Fink also says workers demanding more from their employers is an essential feature of good capitalism. It drives prosperity and creates a more competitive landscape for talent, pushing companies to create better, more innovative environments for their employees – actions that will help them achieve greater profits for their shareholders.
In the following days, he also pushed back against any suggestions that BlackRock would not invest in fossil fuels.
Looney on long-term success
Looney, meanwhile, told the FT that he had spent time worrying about BP. BP’s share price, like many of the majors, plunged in the early days of the pandemic in 2020 when oil demand sank, however since, it has recovered posting a new 8-year high. Looney’s commitment is to cut 40% of its hydrocarbon output by 2030 and replace those profits with lower carbon revenues.
"You cannot go against the grain of society and expect to be a long-term successful company,” Looney said.
To that end, the FT reported that, “While maintaining stable revenues from declining hydrocarbons, BP says it can boost earnings from its transition businesses,” including renewables, biofuels and hydrogen. And the article noted that according to BP staff, culture has progressed under his leadership, “with greater focus on diversity, inclusion and in particular mental health.”
For capitalism to thrive, we should recognize the role an inclusive meritocracy in the workforce plays in balancing profits and our environment. And to attract talent -- the primary resource we need -- we must build our industry in a way that speaks to the time we’re living in.
It’s not just a nice idea. It’s an absolute necessity.