BY AMOL MEHRA AND CAMILLE GERVAIS

“The letter appears on the World Economic Forum and can be accessed here: Business is having a ‘morality moment’. It could become a movement“

For too long, the dominant narrative around the market has been to maximize profit and prioritize redistribution to shareholders, focusing on financial bottom lines and treating human rights, environmental considerations, and governance reforms as externalities. Companies are empowered to roam the world, extracting value from wherever they can at whatever the price – human or environmental. Examples are numerous: oil and mining companies flooding Africa and negotiating extractives concessions with little or no transparency, apparel companies relocating production to jurisdictions to take advantage of lax labor laws, banks engaging in dangerous and predatory lending practices that leave many deeply indebted. Abuses are not just rife, but should be expected. But for recent and relatively sporadic attempts, little has been done in terms of response from governments. Elected officials purporting to serve the public interest are often more concerned with catering to corporate interests than creating rules over them.

The consequences of companies’ unregulated, unscrupulous behavior, beyond harms to people and the planet, have led to a general distrust of corporations and a frustration with an increasingly unequal global economy. A 2016 Gallup poll, for instance, shows that a majority of U.S. adults, 63%, say they are dissatisfied with the size and influence of major corporations. This frustration can manifest itself into dangerous political realities too. Take the election of Donald Trump in the United States, supported by a base that felt, amongst other issues, disaffected and left behind in the global economy.

It is within this context that recent efforts by CEOs themselves become noteworthy, and offer an opportunity to course correct the very nature of the market. Recently, Larry Fink, Chairman and CEO of BlackRock, the world’s largest asset manager, sent a letter to CEOs with the title: “A Social Purpose.” The letter challenged the CEOs to think beyond short-term profit maximization and focus on long-term value, including addressing directly environmental, social, and governance aspects of their corporate activities. What’s more, Mr. Fink challenged the CEOs to adopt a stakeholder focus, rather than a narrowly defined shareholder concern.

Studies confirm Mr. Fink’s reasoning. A 2015 report by Deutsche Asset & Wealth Management and Hamburg University found that 90% of the 2 000 empirical studies surveyed report positive correlations between environmental, social, and governance (ESG) and corporate financial performance. Moreover, socially responsible investments have gained significant ground over the past few years and today represent more than $8 trillion worth of investment. The combined effect of a company like BlackRock with $6 trillion under management and these socially responsible investment communities would mean a staggering $14 trillion of funds available for companies who are committed to making a positive contribution on society.

But this “morality moment” is not Mr. Fink’s alone. Think too about the language used by CEOs like Tim Cook in this past year, telling the New York Times that he believed in the “moral responsibility” of CEOs “to help grow the economy, to help grow jobs, to contribute to this country and to contribute to the other countries that [they] do business in.” Or the actions of Brad Smith, CLO of Microsoft, who, after seeing a rollback on protections for undocumented workers by the Trump Administration, issued a missive about how Microsoft would defend employees who are targeted, and “work with other companies and the broader business community to vigorously defend the legal rights of all Dreamers”. Amazon CEO Jeff Bezos has also chimed in, announcing just last week a $33 million donation to TheDream.US organization to fund 1 000 college scholarships for Dreamers.

Morality is perhaps finally entering the market – and it’s about time. For years, civil society groups and the media have called to attention the impacts and imbalances caused by unfettered capitalism. This work, coupled with consumer and investor pressures, has perhaps created fertile ground for these enlightened CEO’s to plant their own flags.

This should be celebrated, but it is not enough.

Many of these CEOs have focused on key political issues that resonate with their consumer and investor bases, but ignored other pressing human rights, environmental or governance issues within their own corporations. Take tax avoidance for example. It’s hard to understand how a company or CEO could make a claim for moral responsibility while helming a multinational taking advantage of tax havens and loopholes. Consider too labor conditions in factories of production. It’s hard to justify moral responsibility without addressing systemic labor issues like forced labor in a company’s own supply chain.

CEOs must understand that morality should be measured not just from statements and commitments, but rather from evidence that a company is itself addressing human rights, environmental, and governance challenges in its own operations. Still, this morality moment can become a movement, and the leadership of CEO’s like Larry Fink may help make this a reality.